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Why consumer confidence is a relative indicator – Sober Look

This is a syndicated repost courtesy of Sober Look. To view original, click here. Reposted with permission.

Relying on the absolute levels of consumer survey indicators is usually fruitless. Cultural and historical factors impact how consumers answer questions about the economy. The chart below from Barclays compares consumer views of national economic conditions – percent of survey participants that see them as “good”.

Source: Barclays Capital (click to enlarge)

Some of these certainly make sense – such as Greece, the UK, and Italy for example. But from this measure one would think China’s consumers are ecstatic about their nation’s economy. The reality however is a bit different. The headline MNI China Consumer Sentiment Indicator for example shows a trend that is anything but upbeat.

Source: MNI (click to enlarge)

MNI: – The MNI China Consumer Sentiment Indicator dropped for the third month in a row in September to its lowest level since December. The Indicator fell to 89.3 from 90.4 in August. Sluggish economic data and a lack of new government policy stimulus contributed to weaken sentiment. The drop in headline sentiment was due to weak views on current conditions, which fell to 91.3 from 95.0 the month before.

A similar situation is developing in Germany (see this article). With all such survey indicators, relative moves and trends are usually the only meaningful measures.

 

SoberLook.com

Wall Street Examiner Disclosure: Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. No endorsement of such content is either expressed or implied by posting the content. All items published here are matters of information and opinion, and are neither intended as, nor should you construe it as, individual investment advice. Do your own due diligence when considering the offerings of information providers, or considering any investment.

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