You see the latest consumer confidence numbers? Do you even want to? According to the University of Michigan, confidence fell in April to its lowest level since the early ‘80s.
But do you ever wonder how they come up with these numbers? They take a telephone survey of only 300 people. It’s no surprise that people sound depressed: layoffs and foreclosures have people in a funk. And if they think the interviewer is downbeat, they’re likely respond in kind.
So what do the data tell us? We know that the news has been gloomy. But I like to watch what consumers do, not what they say. What they are doing isn’t upbeat, but it’s not that bad either. Consumers are still borrowing and buying stuff—clothes, cars, and big screen TVs. But the pace has slowed.
I wouldn’t panic on the basis of some survey. Chances are, consumers will keep right on spending.
Douglas R. Tengdin, CFA
Chief Investment Officer
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