Consumer confidence murky amid up-and-down economy
Over the past few months, some of the key national indicators of consumer behavior -- retail sales and the consumer confidence index -- have been hard to interpet.
They've been bouncing up and down, and sometimes seem to contradict each other. Last month, for example, consumer confidence ticked up and retail sales fell.
Despite that seesawing, some analysts have said the latest data suggest early signs of a recovery. But not Minnesota state economist Tom Stinson.
"What we've seen really is changes in the indicators well within the noise level," Stinson said.
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Stinson said the ups and downs in retail sales and consumer confidence numbers have been minute, not enough to demonstrate a trend.
"We haven't seen a breakout of strong growth in the consumer sector, or certainly not strong growth in consumer confidence," Stinson said.
Chatting with a handful of consumers gives you a sense of why that economic data is so choppy.
On the one hand, there are people like Zach Christof, who may be helping to drive the economic indicators upward. He's a cartographer and said the recession has not hit his family especially hard -- with no major layoffs among them yet. So, they're not holding back on spending.
"We seem to be functioning as normal, I think," Christof said.
We're wired to pay more attention to the negative news that might threaten us. Bad news is 'stickier' than good news.
That's not likely to change for the worse, since Christof likes the recent changes he sees in the economy.
"Purchasing of cars is easier, getting loans is hopefully easier, even the opportunities with affordable housing, things like that," Christof said.
But over at the Rosedale Shopping Center in Roseville, Anna Anderhagen furrows her eyebrows as she describes the economy.
"I don't think it's going very well," Anderhagen said.
Anderhagen's family has pared down spending and is sticking to a budget. Her worries about money stem from big investment losses and news she hears about work.
Anderhagen is on maternity leave right now from her job as an educator, but her colleagues back at work struggle.
"So many of my friends are losing their jobs, and many people are taking furlough days," Anderhagen said. "It's a very sad time."
Research indicates that for consumers like Anderhagen, bad news about the economy often trumps any positive indications. That's according to Joe Redden, a consumer behavior expert at the University of Minnesota.
Redden said we're biologically wired to pay more attention to the negative news that might threaten us. And once we're convinced of a threat, we are not easily persuaded it's over. He said bad news is "stickier" than good news.
"As new information comes in, that might get me to change my opinion. I selectively pick what I attend to," Redden said. "We have a tendency to look at things and believe things more that already agree with us."
Brianna Coffino knows what that's like.
"Because I don't understand the economy very well, I react very emotionally," Coffino said.
Coffino is a graduate student at the University of Minnesota. She feels it's prudent to believe the economy is bad and just retrench. When she does hear about positive developments in the economy, she's suspicious.
"I do think that I have a reaction like, 'Well, those aren't the ones that are important. Are those the ones that are really meaningful?'" Coffino said.
So she's keeping her wallet closed, and skipping a trip she was hoping to take this summer.
Coffino said politicians or economists probably won't be able to persuade her when the economy is turning around. She'll want to hear it from family and friends.
State economist Tom Stinson said that's actually how a lot of people operate.
"The important thing for the consumer in general is what the rumors are at work," Stinson said. "Are people being laid off at work, is your neighbor talking about layoffs where he works?"
Stinson said a real change in consumer behavior will likely only come when those rumors about layoffs switch to rumors about job openings.
