when an economy is growing it is usually expected that consumers will have more disposable income to spend on discretionary items they ll be less concerned with saving for tough times this leads to a greater demand for consumer discretionary products 
alternatively in a weakening or weak economy consumers are more likely to forego the purchases of non essential consumer discretionary products in favor of adding to their savings these consumers however still need to buy consumer staples such essential and basic household items as toilet paper paper towels food beverages and gas consumer discretionary and economic indicatorsthere are several economic indicators that help economists to determine the state of an economy these indicators are also important for predicting trends for the consumer discretionary and consumer staples sectors typically gross domestic product gdp is the number one metric for analyzing an economy when gdp is growing it indicates a strengthening economy where people and businesses are willing to spend more conversely when gdp is decreasing it is an indication of economic contraction and the need for spending prudence consumer confidence can also be relevant the consumer confidence indicator can shed light on future consumption and saving behaviors of households this insight is tied to answers households provide when surveyed about their expected financial circumstances it s also based on how they feel about economic conditions and unemployment typically in a weakening economy consumer confidence declines and consumers tighten their belts for example they may postpone vacations and delay the purchase of products that aren t essential for daily living these products might include high end clothing big screen televisions and expensive new cars the reduced demand for consumer discretionary products is usually a precursor of lower sales for the companies that produce these products lower sales can lead to worsening economic conditions and greater economic contraction as of december 2022 the cci was 108 3 up from 101 4 in november a level above 100 indicates increasing consumer confidence this means that they ll most likely save less and instead make major purchases in the following 12 months levels below 100 point to a pessimistic outlook for the economy this may result in greater saving and less spending 1the bureau of economic analysis bea releases a monthly report on personal income and outlays it includes consumer income and spending figures the latter is known as personal consumption expenditures pce the report also includes the personal consumption expenditures price index pcepi a gauge of price inflation that is closely followed by the federal reserve fed 23the report documents the spending behavior of consumers in growth phases personal income and personal spending tends to increase leading to more purchases of consumer discretionary products during contractions personal income and personal spending are usually lower and spending on consumer discretionary products decreases interest rates can be an interesting metric to follow during all types of economic cycles in general interest rates rise in growth phases and fall during contractions the level of interest rates is important for companies that tap the credit markets for business funding u s monetary policy usually seeks to lower interest rates in contractionary phases to provide a business stimulus other closely followed indicators that can indicate consumer discretionary trends include the following consumer discretionaries vs consumer staples