Mar 13, 2014

‘Consumer sentiment’: they say one thing and do another

Consumer sentiment might be down, but that won't necessarily translate into economic gloom -- especially given today's jobs numbers, write Bernard Keane and Glenn Dyer.

Joe the Confidence Killer, they could call him. Hockey the Hatchet man of Hope, the Slayer of Sentiment.

The Westpac-Melbourne Institute Consumer Sentiment Index fell again between February and March, the Institute revealed, and is now down to 99.5 after reaching a high of 110 in November. “The proportion of pessimists now exceeds that of optimists for the first time since May last year,” the Institute darkly reported. Fairfax columnistĀ Michael Pascoe correctly pinged Treasurer Hockey’s gloom, doom, we’ll-all-be-rooned rhetoric for the slump. Hockey’s garment-rending about the state of the economy continued well past his ascension to the treasurership. It continued through his first visit to Washington DC (which yielded dramatic predictions of bad times coming, and a $9 billion handout to the Reserve Bank to help fight them), December’s MYEFO statement, in which he used low-ball nominal GDP numbers to complain about the huge debt Labor had left him, and into the New Year, when he promised a slash-and-burn budget.

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2 thoughts on “‘Consumer sentiment’: they say one thing and do another

  1. Dipaha

    Consumer sentiment polling focus group has the same right to swing influence as does the Business Sector Confidence Survey. The ease in which “consumer sentiment” surveys earns a headline on par with “business confidence” could perhaps be a wake up call for pundits and elitist professionals who assume they own the pulpit outright.

  2. Dogs breakfast

    Thank you for those journalist pointing out the statistically significant fact that there is bugger all correlation between sentiment surveys and reality.

    And who was that nobel prize winning economist who wrote the story a few years ago lamenting ‘the pundit delusion’. Name escapes me, but yeah, this is one of those areas of public policy and pronouncements where listening to the pundits is no smarter than listening to the mug on the street.

    There are times when sentiment surveys are almost certainly worthwhile, but when everything is largely benign, as now, they reveal nothing more than political preference.

    And thus have no value.

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