The Conference Board’s Consumer Confidence index shot up today, rising from 61.3 in August to 70.3 in September. This typically correlates with a brighter outlook for the economy, and could lead to stronger consumer spending. However, it may be worthwhile to ignore the Conference Board’s index in the last couple months of an election cycle. Brad Plumer argues using Gallup poll data that Democrats have improved their outlook on the economy, as a kind of refracted benefit for the improving outlook for the President and the party in the upcoming elections.
The Gallup Economic Confidence ratings show this pretty clearly. While Republicans remain at exactly the same level on the economy, and independents have grown slightly more optimistic, Democrats have spiked, up 23 points in the index over the past three weeks.
The signifying event in between there is Bill Clinton’s speech, which among Democrats – and even independents – has apparently convinced them that the economy is on track, with better times ahead. The numbers all shoot up in that week after the Clinton speech, and for Democrats, that bounce never dissipated.
I think the lesson here is that, in our increasingly tribal politics, people take their cues on the economy as much from the perceptions of their leaders as they do from lived experience. This is particularly acute right before an election, which brings out all kinds of red team-blue team dynamics. So I don’t think we can put too much stock in consumer confidence reports for the next 42 days. If the spending rises, maybe I’d look at it differently. No matter what Bill Clinton tells you, your pocketbook has the money in it that it has.