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EconoMeter: Consumer confidence a good indicator?

Roger Showley, U-T SAN DIEGO

Friday, September 28, 2012

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Kelly Cunningham, National University System
Answer: YES

Rising consumer confidence generally reflects greater confidence in one’s job situation and financial outlook. Consumers are therefore more willing to spend and take risks, which should translate into higher business sales. Although the light at the end of the tunnel may be an on-rushing train or impending financial collapse, perceptions of improved circumstances signals consumers are more willing to loosen purse strings and an expanding economy should occur at least in the near term. Of course, as Dr. [Alan] Gin says, economists look for three consecutive changes in an index in one direction to signal turning points for the economy.