Consumer spending refers to the amount of money that individuals or households spend on goods and services. It is a key indicator of economic activity, as it represents the demand side of the economy. When consumer spending increases, it generally indicates that people are feeling more confident about their financial situation and are willing to spend more money on things they need or want. This can lead to increased business for companies, higher employment rates, and overall growth in the economy. On the other hand, when consumer spending decreases, it may indicate a lack of confidence in the economic outlook, leading to reduced purchasing and potentially slower economic growth.