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Home Publications Blogs Beat the Press Consumer Confidence Rose in December: Tell That to the Mayan End of the World Fiscal Cliff Crew

Consumer Confidence Rose in December: Tell That to the Mayan End of the World Fiscal Cliff Crew

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Thursday, 27 December 2012 12:19

The Serious People who are hyping the importance of a deal on the budget standoff before January 1 have various scare stories that are supposed to make us believe that missing the deadline will lead to an economic catastrophe. Part of the story is that consumers will freak out and stop buying things.

This part does not appear to be supported by the data, as the Conference Board Index of consumer confidence showed a sharp increase in December. Actually, that's not entirely right. The index fell sharply in December, from 71.5 in November to 65. However, this drop was entirely due to a drop in the future expectations index. This index has almost no relationship to current consumption.

On the other hand, the current conditions index, which tracks consumption reasonably well, rose to 62.8 in December from 57.4 in November. This is the index that tells us what people are actually doing.

The future expectations index reflects the nonsense reported in the media, which these days means lots of end of the world prophecies over missing the December 31st deadline.

 

Addendum: The NYT committed the same sin.

Comments (8)Add Comment
consumer confidence
written by mel in oregon, December 27, 2012 1:13
consumer confidence has nothing to do with the so called "fiscal cliff". the american economy is heavily based on consumer spending, with a heavy reliance on the poorer elements of society to continue to spend to fuel the economy. the problem is the poorer elements can't spend, they are tapped out, the result of usurious interest rates & heavy bank fees. if they can't find a job, they can't spend. so in spite of all the "deals" advertisers are using to try & entice people to go further into debt, it aint gonna happen. it also seems like many of the well educated are having the toughest time understanding a simple basic fact.
Have consumers ditched the big box
written by April, December 27, 2012 1:45
With all the bad publicity for Macys and Walmart have some consumers ditched the big guys for shopping at local merchants. Is there any survey that measures this?
...
written by Bob, December 27, 2012 1:54
Love your work but sometimes you are a bit hard on the poor WAPO. In the post I am commenting upon you note "The future expectations index reflects the nonsense reported in the media, which these days means lots of end of the world prophecies over missing the December 31st deadline." I wonder how you know this as a factual matter. And are you applying the same epistemological criteria as when you noted in your prior post: "Since Schultz's motives are not known, a serious newspaper would just report his actions without implying that it knew his motives."
FCC, Please Revoke Their License
written by leo from chicago, December 27, 2012 4:05
So of course the knuckleheads on WBBM (CBS Newsradio) in Chicago are repeating over and over again that consumer confidence in down due to fears about the fiscal cliff.

In fact, in their reporting of the stock market today, when the market was down, they blamed it on fears about the fiscal cliff; then when the market started inching back up towards the end of they day, they credited it to news that the House was getting back to work on Sunday night!
Nice job
written by Benjamin Kupersmit, December 27, 2012 6:00
Good work today on NPR. Hard to go on and say "everything you think is basically wrong," and you can't be the only voice in the wilderness, so nice work.
fiscal bluff
written by cy klebs, December 27, 2012 8:26
MSNBC UP show also is promoting this "beat the clock" mentality on budgetary issues. We knew the House of Reps. were into the debt ceiling game as early as February'12. Dr. Baker, You need a louder voice!
Future Expectations are based on the media
written by Dean, December 28, 2012 6:05
Bob,

I was basing my comment on a study that I read many years back. They asked people how they formed their expectations of events 6 months out (the future in the future expectations index). Since most people are not personally studying the economy, they typically base what they think the world will look like in 6 months on what the media tells them.

Sorry I can't give you a reference. It was many years ago.
consumer spending
written by G. Davis, December 28, 2012 8:32
"Sixty-seven percent of Americans polled in the online survey said the impending "fiscal cliff" was not affecting their holiday spending."

http://www.reuters.com/article/2012/12/27/us-usa-fiscal-poll-idUSBRE8BQ0J620121227


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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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