Explanation:

Consumer expectations refer to the economic outlook of households. Expectations will have a significant bearing on current economic activity. If people expect an improvement in the economic outlook, they will be more willing to borrow and buy goods. But, with negative expectations, they will cut back on spending and be more risk-averse.

Expectations may also influence the impact of a government decision. For example, if the government cut taxes and finance it by borrowing more, at least some consumers, might expect the tax cut to prove temporary and in the future, taxes will rise to pay off the government debt. Therefore, the consumers will not spend the tax cut.