What economic measure uses consumer spending to gauge economic strength?

The Consumer Price Index (CPI) is a measure that reflects the average change over time in the prices paid by consumers for a market basket of consumer goods and services. While it provides insights into inflation by measuring price changes, it does not directly gauge economic strength through consumer spending.

The correct choice is Gross Domestic Product (GDP), as it is a comprehensive measure that calculates the total value of all goods and services produced in a country within a specific time frame. One of the components of GDP is consumer spending, which represents the largest portion of economic activity in most developed economies. By analyzing changes in consumer spending, GDP provides a clear indicator of economic strength, reflecting how much consumers are willing to spend and, consequently, how the economy is performing overall.

Consumer spending is a crucial driver of economic growth, as increased spending usually leads to higher production, job creation, and income growth. Thus, monitoring consumer spending through GDP can effectively gauge the robustness of an economy at any given time.