In August, it fell. In November, it bounced. Since then, it's been in a three-month tumble. Last week, the index of consumer confidence plummeted to its lowest point in almost a decade, in the fifth biggest drop since the index began.

But what exactly is the index of consumer confidence?

"The index reflects the mood of the American consumer," says Randy Poe, director of communications at the Conference Board, the New York-based nonprofit research group that has been surveying consumers each month since 1967 on their optimism or pessimism about personal finances and the economy.

Since then, the index has evolved into one of the most predictive and closely scrutinized of the economists' tea leaves. "It's a barometer of the psychology, or malaise, of the nation at any given point in time," says Poe.

The survey is mailed to a different representative sample of 5,000 U.S. households each month. The other major consumer-confidence poll -- the indexes of consumer sentiment and consumer expectations, conducted monthly by the University of Michigan -- surveys 500 consumers.

The survey's five-question poll asks consumers their take on their current family finances, business conditions in general, jobs and employment opportunities, and their financial expectations for the near future. Responses are limited to three basic replies -- good, neutral and bad.

Bleak or rosy, the index "tracks closely whether people are willing to spend or are starting to close their wallets," says Poe.

Who pays attention? The government and politicians do, "and businesses use it to plan," he says.

So telling is the index of consumer confidence that "it has a tendency to move the stock markets," says Poe, one of only two people at the Conference Board privy to each month's results before they're made public on the last Tuesday of every month at precisely 10 a.m.

The results are guarded like a state secret. Outside, only Federal Reserve Chairman Alan Greenspan and the White House Council of Economic Advisers preview it the night before. And 35 chosen reporters, sworn to secrecy until 10 a.m., get the results half an hour early.

"If Bloomberg went with it at 9:58:30, they jumped the gun," Poe says, adding that when "mishaps" happen, the reporter is banned.

Should the index of consumer confidence matter to consumers?

"What we've seen here over the history of the index is a pretty accurate reading of what's happening," says Lynn Franco, director of the Conference Board's Consumer Research Center.

Which, as of last week's index, isn't good news.

Victor Zarnowitz, professor emeritus from the University of Chicago and an economic counselor to the Conference Board, says, "Consumer confidence and expectations are strongly influenced by news, and news has been very, very bad lately as you know -- the war and the economy and terrorism."

But while those findings are "very worrisome," says Zarnowitz, he isn't ready to buy gold and head for the hills. "There have been episodes in the past where you have bad news from the consumer survey and yet we pulled out of it."

Got a consumer complaint? Question? E-mail details to or write Don Oldenburg, The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.