Consumer confidence is the measurement of how optimistic consumers are about the economic future. Economists use it to predict how the economy will be at a later date. For example, if I were freaked out and I thought the world was going to end, and a large majority of other people felt that way, then Economists could predict that spending on luxury items will go down in the future, but spending on survival kits, and food storage will probably rise.

They also use this information to help businesses decide what kind of products consumers will want, and which ones they won't want. It's also used to help determine whether or not we are going to go into a recession, or if we are coming out of one etc.

The consumer confidence index starts with surveying 5000 households across the US. There are five questions about employment, whether or not you think you'll keep your job, family's income, etc. Every six months a different set of households are picked. There is a rating scale for the responses, and that is how it is measured.
Source(s):
http://www.conference-board.org/economics/ConsumerConfidence.cfm


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