How does consumer confidence influence savings rates, and subsequently affect interest rates and economic growth?

Consumer confidence is how optimistic people feel about the economy and their financial situation. When confidence is high, people tend to spend more money instead of saving it, which can lower savings rates. For example, if families feel secure in their jobs, they might buy new cars or go on vacations rather than putting money into savings accounts. Lower savings can lead to less money available for banks to lend, which can push interest rates up as banks need to attract deposits. This change in interest rates can slow down economic growth because higher rates make borrowing more expensive, leading businesses and consumers to spend less.