What Climbing Consumer Confidence Means to you

If you've been scanning the financial headlines this week, you might have noticed that the Consumer Confidence Index climbed to 60.6 in January, up from 53.3 in December. This is far higher jump than the modest increase to 53.5 that analysts had expected.

But why is it important, and what does it mean for your wallet? Here's what you need to know:

•Consumers are feeling better: The index, which surveys 5,000 U.S. households, measures consumers' optimism about the economy. January's reading means we're feeling better, although we still have a ways to go. (A good reading is usually considered 90 or above, and at the moment, pessimists still outnumber optimists.) "What this means, in English, is that it's no longer just egghead economists who think that better times are ahead. The average American consumer doesn't think things are so hot right now, but thinks that in a few months, not only will the recession be over, but it will no longer feel like we're in a recession," says Ken Goldstein, an economist at the Conference Board, which manages the index.

•More spending may be on the way: When consumers are feeling confident, they tend to open their wallets more. There's no way to predict for sure that this will happen, but that's the historical trend. Goldstein says that we may really start to see this as we move into March and April. "There is at least some evidence that there is a reason to have more faith, and more confidence, which means people may spend more money. If they do that, there will need to be more stuff to spend that money on, and that means more jobs. That really starts the ball rolling in a positive direction."