Households

Confidence is how optimistic households feel about their own and the economy's future, especially their job security and expected income.

• When confidence is high, households expect secure jobs and rising incomes, so they spend more and borrow more to buy big items, and feel less need to keep a savings safety net.
• When confidence is low, for example during a recession or when unemployment is rising, households fear losing income, so they cut spending, save more as a precaution and avoid taking on new debt.

A lack of trust in financial institutions can also reduce saving, because people may not be willing to put money into savings accounts.