Consumer confidence drops to new low
TEXT OF STORY
Kai Ryssdal: Let me say right off the bat we love to get email from listeners. Good or bad, it’s always nice to hear what people think of the program.
The other day we got this from a guy in Las Vegas. Longtime listener, he said, but he’s getting sick and tired of us feeding the negative news hysteria about a down economy.
Don’t just take our word for it, though:
[clips of “down economy” stories on TV news]
You could sum up what we’re talking about here with the phrase consumer sentiment. The University of Michigan compiles one of the most well-regarded surveys of exactly that and this morning the good folks in Ann Arbor offered up a sobering number: 69.6. That’s the February index.
We asked John Dimsdale what it really means.
John Dimsdale: The last time consumers were this depressed was right around the recession of 1992. In fact, the Michigan index has only dropped this low during recessions, including those in the 70s and 80s.
Economist Gary Shilling says it isn’t the media that are getting consumers down:
Gary Shilling: They react mainly to their own circumstances: to job availability, to the prospects of a raise or a bonus, to the prospects of being laid off…
Consumer psychology is an important gauge of whether people plan to buy goods and services and Yale University economist Robert Shiller says people can talk the economy down and up:
Robert Shiller: There’s a general perception that government leaders and business leaders like to put an optimistic slant on things because they’re aware that confidence is very important for the success of the economy.
After all, Shiller says, it was President Herbert Hoover who said “the fundamentals of the economy are sound”… just before the Great Depression.
In Washington, I’m John Dimsdale for Marketplace.
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