Since consumer spending makes up about two-thirds of overall spending, consumer attitudes are an important part of the investment landscape. Intuitively, if consumers are confident about the future, they are prone to continue spending and make long-term financial commitments to purchase “big ticket” items like homes or automobiles. Conversely, if they are not confident about the future, they are likely to hold back on major purchases.

Consumer confidence is generally reflective of the economic environment, not necessarily predictive of the future. But consumers don’t always walk their talk, although the idea behind confidence surveys is sound.

Despite the intuitive sense that a slowing or dropping level of consumer confidence should foretell a recession, that doesn’t always happen. As a matter of fact, at times consumers have kept our economy afloat. Despite wars, pestilence, stock market bubbles, a dearth of capital spending by business, corporate governance scandals, slipping consumer confidence—you name it—at times consumers have continued to spend.

A better way to understand consumer behavior might be to look at long-term trends in consumer spending patterns. Students of consumer behavior like Harry S. Dent, author of The Roaring 2000s Investor, point out the simple fact that consumer spending has more to do with the age of the consumer than the condition of the economy.

For example, a younger population in their late 20s and early 30s are more likely to spend on family formation goods and services as they have babies, buy their first homes and begin raising families. As they age, they trade in smaller homes for bigger homes. Eventually, they sell their big homes and move to retirement communities. Throughout their lives, their spending patterns change in a very predictable fashion. Dent argues that peak spending per household occurs when the head of the household is age 46-47.

So when baby boomers have bought their last big homes and spent all they’re going to spend on furnishings and toys, our economy is likely to come up short. At that time, consumer confidence levels are likely to be high, reflective of the good life, not necessarily reflective of their future spending patterns.

That’s when we have to be careful.