How does consumer optimism or pessimism affect spending?

When people are pessimistic about their prospects and about the state of the economy, they tend to cut back their spending and take on less debt. On the other hand, when they are optimistic about the future, they tend to reduce the amount they save, take on more debt, and buy discretionary items. Thus, the overall savings rate is influenced by (1) consumers' pessimism or optimism about their personal circumstances cultural differences in attitudes toward saving.