Consumer Confidence Rises and Falls at the Same Time
The University of Michigan consumer confidence index was released on May 27; but just four days later, on May 31, the Conference Board released its consumer confidence index, which jumped dramatically to 102.2 for May from 97.5 for April.
Interestingly, the concensus forecast of economists for the Conference Board's consumer confidence measure had it slipping a little to 96.0 instead of rising strongly. The components of the Conference Board index almost all rose, with consumers feeling better about job prospects, business conditions, and personal earnings. In particular and in stark contrast to findings for the same period by the University of Michigan, the Conference Board found that its index of expectations rose to 92.5 from 86.7.Dark Wraith CyberGloss
The Conference Board represents itself as a non-profit organization that "...creates and disseminates knowledge about management and the marketplace to help businesses strengthen their performance and better serve society".
Although the University of Michigan consumer confidence index and the one calculated by the Conference Board use different survey methods, they pose to represent the same essential quality about consumers, whose activity makes up nearly two-thirds of all economic activity in the United States. In recent years, some economists have pointed out that the relationship between consumer confidence and actual consumer behavior is not strong. Other economists tend to see the weakness of the correlation as a sign that consumers do, indeed, act upon their confidence about the future, but that they also react to more timely events in their lives that happen more quickly than month-old surveys can capture in snapshot statistics. To some extent, though, now that two major publishers of consumer confidence indices have found opposing results for consumer confidence, whatever the consumer component of the American economy does over the coming months, at least one of the measures will have proven itself correct. This should diminish any criticism of consumer confidence indices as unreliable.
Published 6/01/2005 04:23:00 PM
<< 16 Comments Total
Seems like all the recent polling I've seen places the economy at a higher level of concern relative to bush's contrived issues, including Iraq, Social Secuirty, and the war on terror. bushco could probably use a boost about now, since everything seems to point to the fact that he is a lame_uck.
Have these two entities shown any underlying bias previously?
Any comparison graphs of the two numbers over the last several years?
Now, that's an interesting idea, Mr. Goat.
I think I'm going to make it a project over the next couple of weeks to see how the numbers from the University of Michigan and those from the Conference Board have been sizing up relative to one another.
The Conference Board is a non-profit organization, but it gets its money from the business community. That having been said, it should be providing unbiased information if businesses are to rely upon what it's generating. However, if you read blurbs on the Website of the Conference Board, you'll get a distinct impression that they are favorable to the business way of seeing things. Today for example, one of their headliners had to do with a survey they conducted concerning how much money businesses are budgeting for salary increases next year. I could almost feel their giddiness about the fact that they'd found that, on average, businesses were budgeting for a mere 3.5% increase overall.
This, of course, means that salaries will not keep pace with inflation next year; but the Conference Board framed it as good news, which it is for businesses, but not for households that will, once again, see erosion of real purchasing power.
Funny how one man's good news is another's misery about to happen.
The Dark Wraith does appreciate the small ironies of market economies.
So I see the Board's methodology uses five survey questions, with response categories of positive, negative, or neutral. Two of the questions relate to current conditions, and three of the questions relate to future expectations.
I see in their press release though, they use the terms bad, good, plentiful, and hard to get. Are they spinning the positive, negative, or neutral responses from the survey, or are they actually asking some additional questions?
Also, do the UM surveyors use a similar 40% current/60% future mix of questions like that of the Board in their assessment of confidence?
Good evening, Mr. Goat. The University of Michigan structuring is similar, but the part where the Conference Board leaps from its 3-way dimensionality in questions to numerical, tenth-of-a-point indices is highly suspect and not exactly what U of M does. The Conference Board is playing an old a fallacious game that has roughly to do with what's called the "Weak Law of Large Numbers" to represent that, if enough one-two-or-three answers are put together, a continuum of sorts can be imputed.
It's bad statistics. I came from a probability theory background where the econometricians told me that, if I were ever to do certain things with data, I would be hunted down and turned into a sociologist. That frightened me.
One of the many methods my anal-retentive professors warned against was exactly what the Conference Board is doing with that imputation of continuous index values.
It never ceases to amaze me, the statistical methods that are used these days without even a thought about why they're completely useless. Just a couple of weeks ago, I heard a math professor who fancies himself a statistician (why anyone would have such a weird fantasy as that is beyond me, anyway) going on about using something in statistics called a "residuals plot" to figure out the distribution function of some underlying data. Now, Mr. Goat, of all the procedures I was taught never to use, residuals plot analysis is right at the very top of the list, side by side with an abomination called "step-wise regression." But there was that professor blabbing on about the wonders of the residual plots he was teaching his statistics students. I pointed out the damning flaw in residuals plot analysis (the residuals the arise from data points are not independent of one another, so they don't tell anything about what the nature of the data is; instead, they tell only about their internal relationship to each other and to themselves). The point I made was so far outside of his realm of interest that I could tell he wasn't going to hear a word I said, despite his being a bright and very well educated fellow.
The moral of the story is two-fold: professionals use bad statistics, and both professionals and those who fancy themselves such are entirely immune to any point that would shatter their self-sanctified ways of measuring and then interpreting the world around them.
Sort of like neo-conservatives, actually.
The Dark Wraith loves the rational life of academia.
Hi Dark Wraith - Good news!
College grads find a buyer’s market on the job-hunting trail
Now grads are facing a bounceback in the market, with 13 percent of employers expected to increase college hiring this year according to data released in May by the National Association of Colleges and Employers, or NACE.
NPR had this story on yesterday and the way they portrayed it (or was it how I listened to it?) but it sounded as though the future is going to be rosy.
It did give me flashbacks to Orwell's book, 1984, though. I guess I'll have to see before I believe.
Orders to U.S. factories advanced by 0.9 percent in April, the fastest clip in five months, while worker productivity at the start of the year was better than originally thought and the nation's retailers enjoyed strong sales despite a cold spring. But all the economic news released Thursday wasn't good. Labor costs, a key factor influencing inflation rates, rose sharply over the past six months.
[Posted only because the The Dark Wraith Forums has not yet competed its aquistion of the Goat and Bugle.]
And now for an extra credit question. How is Productivity defined by the Commerce Department?
This is for you Dark Wraith though you probably already saw it...but just in case.
Challenger: Planned Job Cuts Surge in May
Thursday, June 02, 2005
Reuters
NEW YORK — Planned layoffs in the United States jumped 42 percent in May from April, led by hefty job cuts in the computer industry as a result of slow growth in the European economy, outplacement firm Challenger, Gray & Christmas said Thursday.
Challenger, Gray & Christmas Inc. (search) said employers announced 82,283 job cuts in May, up from 57,861 in April, and up 12 percent from May 2004.
Computer companies announced 17,886 job cuts in May, eight times higher than April's level and accounting for more than one-fifth of all job cuts in May, Challenger said.
Mr. Wraith...
This, of course, means that salaries will not keep pace with inflation next year; but the Conference Board framed it as good news, which it is for businesses, but not for households that will, once again, see erosion of real purchasing power.
Gee, and here I always thought that if folks don't have money to buy product, businesses lose profit. So I can only see it as good news for business if the business happens to be in one of those commodities that don't have a substitute, like gasolene.
Am I being really dense, or am I missing some factor you need an MBA like Shrub's to grasp?
Payrolls Grow by Just 78,000 in May
Jun 3, 8:38 AM (ET)
By JEANNINE AVERSA
WASHINGTON (AP) - Employers throttled back hiring in May, boosting jobs by just 78,000, the government reported Friday. The most sluggish pace of payroll expansion in nearly two years dramatized the erratic behavior of the nation's job market.
Well that's weird. It looks like Dark Wraith last posted 12:19AM on June 2, in response to My Pet Goat's post. We've seen nothing of him, since.
Dark Wraith, I hope you're not having irritating computer problems, instead, I hope you're having fun enjoying the start of summer.
Hopefully the question on productivity didn't blow a vessel. I really think though, that it is more a matter of the current Wallmart sale on Spam; limit two per customer. It takes a lot of trips to fill his pantry, and last I heard, his local store didn't have a wireless hub.
Didn't he suggest he was going to be preoccupied with code upgrading?
- oddjob
My Pet Goat - Maybe, he ran out of coffee, too:)
OldWhiteLady- if he ran out of coffee, I expect we shall soon see him hit the news for holding a diner at gunpoint while he hooks an IV up to their urn.
Awright, everybody, I'm here, and I have a huge cup of coffee from an all-night diner.
And Wild Clover, I wouldn't need to use a gun to get them to surrender their coffee; the crazed look in my eyes would be enough to scare everyone out of the diner. It's funny that you folks should mention no coffee, though. I went about eight hours without any, and I had this splitting headache that nearly sent me over the edge.
Fortunately, that crisis is over. My last difficulty will be making it back safely to where I started this difficult if somewhat weird and unintended adventure across America. Needless to say, I don't think I'll try this again in the near future.
The Dark Wraith has learned his lesson.
Dark Wraith - Further details are a must. Inquiring minds, and all that, you know. Good to know your adventure is almost at end:)