Reading Between the Lines of Consumer Confidence Measures

Public opinion data about consumer buying intentions have proven to be reliable indicators of future economic trends. This demonstrates the advisability of including well-informed public opinion data in public policy planning. This introduction and the three essays that follow are based on a panel on "Taking the Pulse of the Economy: A Fresh Look at Economic Indicators," which was presented at the 1981 Annual AAPOR Conference. Doris A. Graber is Professor of Political Science at the University of Illinois at Chicago. Public Opinion Quarterly Vol. 46:336-339 ? 1982 by the Trustees of Columbia University Published by Elsevier Science Publishing Co., Inc. 0033-362Xl8210046-336l$2.50 This content downloaded from 207.46.13.129 on Mon, 27 Jun 2016 06:20:30 UTC All use subject to http://about.jstor.org/terms 337 CONSUMER CONFIDENCE MEASURES people's willingness and ability to formulate sound opinions about difficult economic issues when they have been unwilling to give much thought to other areas. Above all, most people feel that they have no choice in the matter: they must form opinions about the state and prospects of the economy because they need to make important economic decisions. They believe that these decisions involve their personal economic security very immediately and directly because major economic investments must be financed through depleting savings or by borrowing against future earnings. A decision to buy a house, a car, or major appliances and furniture is risky and must be carefully considered. It requires complex calculations about personal income trends, job security, and the prospects for inflation and interest rates. It involves appraising the current state of the economy, comparing it to past conditions, and projecting future trends for several years ahead. These are difficult calculations, yet many people learn to do them well because they have had repeated experience with financial decision making. By contrast, the pressure to make political decisions is less compelling and their direct impact on personal life is less clear. Many people are therefore unwilling to make the effort that well-informed decision making requires. Nonetheless, the fact that people do make well-reasoned financial decisions permits a guarded optimism about their capacity for other complex appraisals if there is sufficient motivation and frequent occasion to practice the decision-making art. A look at the impact of opinions about the economy also provides rare gratification for scholars of public opinion, who frequently find it difficult to demonstrate linkages between opinion and behavior. Judging from the evidence presented below, large numbers of people do act in accordance with their appraisals of economic conditions. Economists agree, for instance, that consumer behavior was strongly affected during the 1970s by attitudes of mistrust. Consumers lost confidence in the ability of the government to solve economic problems; they came to believe that inflation and unemployment are permanent afflictions which vary only in degree of severity; and they lost the long-standing belief that living standards could always be expected to rise. The actions taken in conformance with these beliefs had a major impact on the American economy. In fact, in the past 30 years, whenever consumers feared a recession and therefore refused to buy cars and other durables, the economy has gone into a tailspin. When the times seemed propitious for buying and investing, an economic upturn has followed. Consumer expectations have been advance indicators of future happenings because they have foreshadowed by three This content downloaded from 207.46.13.129 on Mon, 27 Jun 2016 06:20:30 UTC All use subject to http://about.jstor.org/terms