Lies, Damn Lies, and Consumer Confidence At an All-Time Low
Another week gone by, another superlative headline about the unprecedented malaise afflicting the U.S. economy.
The Associated Press laments: Consumer Confidence Falls to New Low
No doubt, an impressively daunting newsflash.
Consumer confidence is after all a well-known indicator, one closely watched as a bellwether for consumption patterns, retail demand, and economic growth. That's why, for more than 40 years, policymakers and corporate decision-makers have looked to the Conference Board's definitive Consumer Confidence Index.
Only that's not precisely what the AP meant. They're referring to the RBC CASH (Consumer Attitudes and Spending by Household) Index, which has been around only since 2002. So by "new low" they mean "lowest in 6 years".
It's no wonder the AP opts for the CASH Index. The actual Consumer Confidence Index is not only not at an all-time low, it's not even at a 6-year low. The index currently sits at 64.5, higher than it was five years ago (61.4 in March 2003).
But for argument's sake, let's focus on this much younger, less standard gauge of consumer confidence. The Associated Press goes on to recount some of the poll's internal numbers that tend to support their implicit thesis that the country is teetering on utter destitution. But they leave out a few bits of disconfirming data which not only don't show deterioration in April, but in some cases show improvement.
If you thumb your way through to, let's see... Question #1: "Generally speaking, would you say things in this country are heading in the right direction, or are they off on the wrong track?"
- Right direction: 24 (up from 22 last month)
- Wrong track: 71 (down from 73)
- Spread improvement: 4 points
Or Question #10: "Rate your current financial situation, using a scale from 1 to 7, where 7 means your personal financial situation is very strong today and 1 means it is very weak."
- Average: 4.3 (up from 4.2 last month)
Or Question #17: "Thinking about the next 30 days, do you think it will be a good time or a bad time to invest in the stock market?"
- Good time: 28 (up from 25 last month)
- Bad time: 65 (down from 67)
- Spread improvement: 5 points
Or question #18: "Thinking of the next 30 days, do you think it will be a good time to buy real estate, such as a house, vacation property or investment property?"
- Yes: 38 (up from 36 last month)
- No: 60 (down from 62)
- Spread improvement: 4 points
Other questions about respondents' own comfort purchasing houses, cars, and households items also showed either improvement or no deterioration. It tended to be questions about respondents' opinions of the welfare of others that showed marked deterioration. As observed in other recent polls, the CASH index seems to be capturing a phenomenon whereby consumers' confidence about their own financial outlooks is holding steady or even improving, while their impression of the plight of others is worsening sufficiently to drag down the composite top-line numbers.
With this curious divergence, it's almost as if some external factor were falsely influencing people's impressions of the state of the economy...
Finally, it's worth noting that the April survey polled nearly 30% more Democrats than Republicans. Among the Democrats surveyed, most identified themselves as strong (versus moderate) Democrats, while among Republicans, the large majority identified themselves as moderates.
Handcrafted by Flip on April 11, 2008 |
TrackBack URL for this entry:
Listed below are links to weblogs that reference Lies, Damn Lies, and Consumer Confidence At an All-Time Low: