Relating Economics to Statistics
While checking out the msnbc.com website, I came across an article about consumer confidence index and the drastic fluctuations that it has been taking in the last eleven months. Consumer confidence is the concept about how people feel about the economy and the decisions people make about how much money they spend. This index is so important because "consumer spending accounts for more than two-thirds of U.S. economic activity", according to msnbc.com.
The consumer confidence index rose up 6.4%, which is the largest jump it has made since August 2004. Previous to this enormous gap being filled, within the last year consumer confidence fell dramatically possibly due to social security plans and the slow job growth. However, there is going to be two million new jobs created and this increase in the job market is one of the main reasons why the index is so far up. The sentiments about job prospects rose 10.9% and and personal finance went up 10.6%. Also, one of the main components of the consumer confidence index is the view on the entirety of the economic situation, which rose 12.3%, which helps bring up the average.
Not everything has sky rocketed for the consumer confidence index, however. The downfall to this is feelings about the future fell 10.2%. This actually does not make sense to me because if the society feels that there are good job openings and finances will do well, then why do they think that the future is going to be bad?
posted by bruckone at
11:08 AM
2 Comments:
You forgot to include links in your post.
MSNBC story
I'm not really sure about the relationship between job prospects and future expectations, but job prospects are only one--albeit and important--component of future expectations about the economy.
Did you know that there are two consumer confidence indexes? Amanda's post is about one done by the Associated press; the other is done by The Conference Board. I think the numbers generally agree. She's also right when she talks about the importance of consumer confidence on the economy. It can have spriral effect: I'm not confidence so I don't spend money, other people see I'm not spending money, so they get less confidence and don't spend their money, I see that others are even less confident than me, so I adjust my confidence downwards, etc. and pretty soon the economy is in the toilet. This is kind of what Keynes was talking about when he refered to our economy as being driven by animal spirits.
By
John Topoleski, at 12:48 PM
As to the comment about job prospectus and future expectations, this was very confusing. One would assume this would have a positive correlation, however, the figures demonstrated that it had an inverse relationship.
Also, this whole idea of a Consumer Confidence Index (the AP one I guess...) is very strange to me. This may be because I am only 20, however, I do not base my purchases off of what I see other people doing. Agreed that I get some financial support from my father, if I want to but something and I have the money I will buy it.
Does this index basically demonstrate larger purchases such as cars, houses, etc.? Or is it for anything in the free market to buy?
By
bruckone, at 2:18 PM
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