Consumer confidence continues to climb, to 114.8 in January which is nearly 7 points above December and nearly 1 point above Econoday's consensus. In a big positive, the gain is supported by a big decline in jobs-hard-to-get which is down 3.3 percentage points to a very low 9.8 percent which will have forecasters marking up their estimates for January's employment report.

Other positives include a sharp fall in those who see employment weakening six months hence (15.3 versus 18.4 percent) and a sharp fall in those afraid that their future income will decline (11.5 versus 13.6 percent). Another positive is a dip in the report's readings on inflation expectations.

These better-than-expected results support the Relative Performance Index which stands at 19, safely above zero to indicate that recent US economic data are coming in above expectations. And when excluding inflation data, which have been cooling more than expected, the index rises to 32. Better-than-expected results for the real economy combined with lower-than-expected results for inflation is an ideal combination for policymakers and won't be pulling expectations ahead for Federal Reserver rate cuts.

The consumer confidence index is expected to rise further in January, to a consensus 114.0 versus 110.7 in December which was much higher than expected and up nearly 11 points from November.

The Conference Board's confidence report surveys consumers on their assessments of the labor market, business activity, and their own financial conditions. The survey is conducted by Toluna, an online community platform. (Conference Board and Toluna)

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer confidence index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.