Consumer Confidence Is . . . What?

We have conflicting trends from the two major surveys of consumer attitudes.  The Conference Board’s survey of consumer confidence is moving up, while the University of Michigan’s Survey Research Center survey of consumer sentiment is moving down.  I think that the Michigan index is usually more useful, but neither index beats the fundamentals: unemployment and inflation are key drivers of consumer attitudes.  Those elements can be combined (as suggested by University of Chicago economist Robert Barro) in a "Misery Index," which shows gradual improvement.  (Note that in the consumer attitudes surveys, bigger is better; but for misery, bigger is worse.)

So it looks like good news, but the divergence between the two surveys of consumer attitudes make me wonder if we aren’t near a turning point.

Business Strategy Implications:  Outlook is fairly good, but let’s be careful.  Montior sales and inventories of consumer products a bit more carefully than normal.