How do you feel about the economy?

Does that seem too touchy-feely to use as a real gauge of the economy? Well, the Conference Board's report on consumer confidence was a key ingredient in the market's gains yesterday. Apparently the rebound in consumer confidence caused investors to catch a whiff of the sweet smell of recovery.

But what the heck does "consumer confidence" mean? Later this week, we're going to see a second measure of consumer confidence out of the University of Michigan in conjunction with Reuters. To get a better idea of what this data means, I dug up the survey and weighed in with a little sentiment of my own.

1. We are interested in how people are getting along financially these days. Would you say that you (and your family living there) are better off or worse off financially than you were a year ago?

Worse off. Thankfully, from an income perspective, my family is in about the same position that we were last year.

The overall financial picture is another story, though. Living in Las Vegas, we've experienced one of the worst housing markets in the country. While a fixed mortgage keeps our payments manageable, prices have fallen further than singer Chris Brown's reputation.

Meanwhile, an investment portfolio that includes hard-hit stocks like Bank of America (NYSE:BAC) and American Express (NYSE:AXP) provides the second part of the financial one-two punch.

2. Now looking ahead -- do you think that a year from now you (and your family living there) will be better off financially, or worse off, or just about the same as now?

Better off. The job market is a pretty bleak place right now, and more so in Las Vegas, with casinos like MGM (NYSE:MGM), Las Vegas Sands (NYSE:LVS), and Wynn (NASDAQ:WYNN) facing tough times. Should either my spouse or I lose our jobs, I may have to set up a lemonade stand on the Las Vegas Strip.

Job concerns aside, houses seem to actually be selling once again, which bodes well for prices a year from now. The stock market has already had a heck of a rally, and although I'm a bit concerned about the overall market valuation, at this point I'm expecting to see the market at least stable between now and this time next year.

3. Now turning to business conditions in the country as a whole -- do you think that during the next 12 months we'll have good times financially, or bad times, or what?

Bad times. I initially answered "good," but then realized that it's only going to be good in the way that burlap underwear is good after changing out of iron bloomers. On an absolute basis, I expect that the next year will continue to bring challenges. Unemployment will remain high, concerns over how the Federal Reserve plans to manage the money supply will linger, and consumers will remain more protective of their wallets.

4. Looking ahead, which would you say is more likely -- that in the country as a whole we'll have continuous good times during the next five years or so, or that we will have periods of widespread unemployment or depression, or what?

Good times. While I have my concerns about some of the programs that the government has introduced to deal with the downturn, I'm optimistic about the coming five years. It may not be continuous good times, where everyone parties like it's 1999 (or 2006), but I think economic activity and employment will both be on an uptrend.

5. About the big things people buy for their homes -- such as furniture, a refrigerator, stove, television, and things like that. Generally speaking, do you think now is a good or bad time for people to buy major household items?

Good time. I need to qualify this by saying that I'm not recommending that everyone grab their credit cards and run out to Best Buy (NYSE:BBY) and Lowe's (NYSE:LOW) to spend like drunken sailors -- after all, that's what got us into this mess. However, for those who have cash -- yes, cash, not credit -- now can be a great time to find deals on all sorts of products.

Good value investing means buying low. Buying or replacing a major appliance when sellers are desperate to move merchandise seems like a pretty savvy move.

What happens next?
The U of M survey tallies opinions from 500 respondents. The folks with the calculators jam the resulting numerical data through a formula.

The result is a tidy number that gives an idea of how consumers broadly feel about their financial position and prospects for the future. And while the people answering this questionnaire generally won't be economic forecasters, these regular consumers (not economic forecasters) make up 70% of the U.S. economy.

Now that you see how the sentiment index works, and where I stand, why not share your thoughts on where you think the economy is headed? Scroll down to the comments section and chime in.

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