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It's A Deal

Crisis In Confidence

I’m confused. Consumer confidence comes in at a multi-decade low Friday, but at exactly the time that report is coming out, I’m standing in a line snaking through Starbucks, taking 15 minutes to get a simple cup of coffee. A simple, $4 cup of coffee. (Why do I go there again? Oh yeah, it’s the proper world’s version of crack.)

This is why these and other surveys like it – most economic data, really – can’t be trusted. Some barometers are meaningless (weekly jobless claims), others are twisted to the point of being useless (“core” CPI, what a joke) and others, like a reading on consumer confidence, rely on us for their veracity (yes, we feel horrible about the economy – let’s go drop $200 in the closest bar and talk about it).

It’s old school, but the best way to gauge the health of the economy is to see how people are actually behaving. Here’s what I see:

     - Just got back from a few days in Hilton Head, where I played some golf, then watched the pros play. Tee times were tough to come by, the (expensive) tournament was packed, and the restaurants were overflowing;
     - My favorite local restaurant (Chambers Walk Café, Lawrenceville, NJ, outstanding) is getting increasingly difficult to get into;
     - Despite $12 gas, or whatever it’s up to, I’m not seeing fewer cars on the road, but more.

Not exactly empirical evidence, I’ll grant you that. But watch your newspaper coverage tomorrow and notice how it’ll be shaped to paint us in a deep recession, or even worse. Nonsense, at least if you're basing it on a consumer confidence poll.

Right now you may be thinking, ‘But wait, aren’t you the guy who’s been saying we’re in a recession for half a year?’ That’d be correct, but it wasn’t rooted in a telephone poll of shoppers. The recession was the direct result of Wall Street banks’ inability to value their assets. To badmouth the economy as you buy a new lawnmower is one thing, but $200 billion in level 3 assets is quite another.

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Reader Comments

anecdotes posing as useful news. please spare us the pointless pixels. [nick gogerty, April 25, 2008]

Tom Granahan

Tom Granahan is the Editor of IDD. He has more than 15 years of financial-journalism experience, having written about the stock market for Dow Jones Newswires and The Wall Street Journal for several years. He also supervised the Newswires' U.S. bureaus, and was the founding editor of Dow Jones Market Talk, which some consider to be one of the earliest forms of financial-news blogging. He graduated with a BA in journalism from Temple University in his hometown of Philadelphia.

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