Not sure how many of you have noticed, but the numbers that keep coming out on the economy are consistently pretty-bad-but-they-could be worse kind of numbers. Also not sure if you noticed, but the news has sort of just stopped talking about the economy ...
So it should come as little surprise then, even with no indication of economic improvement, that consumer confidence numbers are on the rise - and fast! It seems that without hearing bad news about the economy all the time, people are actually starting to think it's improving (even I have to actively resist this trap). But then again, people thinking the economy is better could very well be all it takes to start the recovery.
Don't screw this up for us CNN.
Good point. No one seems too worried about swine flu anymore either, even thought there are actually more confirmed cases in New York now than there were 2 weeks ago.
ReplyDeleteSo what exactly are "consumer confidence numbers"? How are they calculated?
The Economist may not agree with you, Chris.
ReplyDeleteKatie, consumer confidence is "[...] the degree of optimism on the state of the economy that consumers are expressing through their activities of savings and spending" ("Consumer Confidence Index"). Each month The Conference Board asks each of 5,000 households (presumably a representative sample) for opinions on: current business conditions; business conditions for the next six months; current employment conditions; employment conditions for the next six months; and, total family income for the next six months. Respondents rate their confidence in each category as either positive, negative, or neutral. Next, each category is looked at individually: the number of positive responses is divided by the sum of the number of positive and the number of negative responses, and then this number is scaled using the 1985 figure as a baseline. The indexed values for each of the categories are then averaged together to create the Consumer Confidence Index (the average of questions one through three is known as the Present Situation Index, while the average of questions four and five is known as the Expectations Index). You can see a graph of the Consumer Confidence Index over time here.
Not sure which part you're saying they disagree with - I personally side with the economic data itself, thinking the recovery is probably a few months off. But as you know, in economics consumers' perceptions/expectations can often drive recovery on their own ("hey, the economy is finally bottoming out - now is the time for us to jump in on that house!").
ReplyDeleteOr you may be saying the article disagrees because it sites some positive numbers. And they're certainly out there - we're definitely getting "mexed missages" from the data - but I think an objective view of the data that's come out can not be regarded as showing a positive outlook.
Whoops. I only quickly scanned your original post and mistook what you were saying about public opinions for what you believed.
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