Check it out:
"We do not view this survey as a useful indicator of consumer behavior or the economy. The index was likely weighed down heavily by the emotional response to the devastating images that resulted from Hurricane Katrina (including an undermining in confidence in the government’s ability to respond to such events). In addition, the high cost of gasoline likely also took its toll on consumer sentiment. We expect sentiment will slowly recover over the coming months."
— John Ryding, Bear Stearns, in WSJ
Go figure: A measure of sentiment was impacted by emotions . . . funny, I thought the entire point of measuring sentiment was to gage consumer emotions.
Jeez. And some people wonder why I make fun of economists . . .
Don’t let me discourage you from making fun of the dismal scientists, but his point wasn’t that the survey was a poor measure of consumer sentiment or emotions. He said it wasn’t a good predictor of consumer behavior or of the economy. Those are different things. It always surprised me that the financial press took those consumer sentiment surveys so seriously. How good a predictor of economic performance are they even in the absence of a hurricane?
Actually, consumer sentiment does a pretty decent job of forecasting retail sales . . .
Given that consumer spending is 70% of the economy, it makes sense to at least watch sentiment when it makes outsized moves — like yesterday.
More on this later today . . .
this is just the beginning. Wall St can ignore the number and act like their boy GW saved the supply-side world and his presidency w his thursday nite speech from NO but the average US consumer looks at NO and knows, finally, that they are all alone in this laissez-faire world. let’s see if laissez-les bons temps roulez now brother.
Scorpio.
Welcome. Glad you finally see the light. After a half century (at least) and trillions of dollars building up a nanny state, Katrina points out its major flaw. Government won’t be there when you really need it. You are, as you so aptly point out, on your own.
I think you meant that it’s the evil W’s fault. In that case, you have a little ways to go, but you are heading in the right direction. Now take the final step. Doesn’t matter if an R or a D occupies the WH or any of the myriad governement slots in between, right down to the local NO dog catcher. They are not prepared to, or willing to, take care of you when the chips are really down. They just want your vote when the bons temps roulez, brother.
Just gotta say,you’ve quickly become my favorite econ blogger. Keep up the good work, the honesty and the great sense of humor!
Patten Recognition..
All negative economic data points are discounted and/or spun into something positive…
Conclusion– we are at the tipping point of a recession, stock market collapse.
When the street emphasizes only negatives, that will be your marker to begin searching for positives.
What’s new?
“After a half century (at least) and trillions of dollars building up a nanny state, Katrina points out its major flaw. Government won’t be there when you really need it.”
After half a century of deriding and disparaging govt, and after more than a term of stuffing Federal bureaucracies with cronies and incompetents, as well as stifling and firing scientists and whistleblowers, the Rethuglicans feel they have made their anti-government case.
Well, isn’t that interesting. We already know these right wing ideologues don’t give a sh*t about the welfare of any Americans but the richest. We already know that Rethugs don’t give a sh*t about starting wars on lies.
Those who can take care of themselves can help themselves (to the spoils). That’s the real philosophy of these anti-govt, anti-tax crusaders. It relies on the gullibility of the American voter. How long will that last, in the face of declining incomes and increasing gas prices? Declining health coverage? etc.
How long will it take before this anti-govt ideology shows its iron fist?
Or will the American voter first reject their endless demand, in endless forms, to Kiss Rich Butt?