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Questionable headlines
When I started reading the news today, I came across a headline that said “Consumer sentiment rises in January.” At first I thought “What exactly is consumer sentiment?” After reading the article and coming across the phrase “consumer confidence,” I had a better idea of what it meant.
Wikipedia is my go-to source for simple explanations.
But I still had questions. “It’s going up? That doesn’t seem right.” And “how is something like that measured?” It didn’t make sense that consumers were becoming more confident about, well, consuming. So I figured I better check it out.
To Wikipedia!
My first instinct was to head to a place that is famous for explaining things in layman’s terms. Sure enough, at Wikipedia there was an entry for “Consumer Sentiment.”
Consumer sentiment takes three things into account:
- How consumers view prospects for their own financial situation
- How they view prospects for the general economy over the near term
- Their view of prospects for the economy over the long term
It also notes that this index can affect the stock market, bonds and the value of the dollar. The consumer index doesn’t affect the price of a payday loan.
How do they know?
The study was invented at the University of Michigan in the 1940s. It is conducted monthly. The data is collected through telephone interviews.
The maximum consumer sentiment index is 100, which it hit in 1964. Wonder what that must have been like? So basically the number represents the percentage of people that express optimism about the three criteria. That made the news that followed those headlines even more surprising.
A nation of optimists
The consumer sentiment index rose this month from 60.1 to 61.9. Analysts expected a reading of 59 for January, so I wasn’t the only person who was surprised. This reading has been dropping steadily since September, when it was 70.3.
So not only is it going up, more than 60 percent of Americans have a positive outlook when it comes to their fiances and the economy. With unemployment so high and the promise of more layoffs in the future, I find it surprising that people are becoming more confident even while the economy is getting worse.
Am I a cynic?
So am I overly pessimistic for wondering why people would have confidence in the economy. Another item in the news today covered the amount that prices rose last year: 0.1 percent. That might sound like good news to some people, but economists fear that this will lead to deflation, and that would certainly throw the economy into even more dire conditions.
Also in the news today, electronics retail giant Circuit City, which filed for bankruptcy in November, announced it will liquidate its assets. It failed to reach an agreement with creditors, so the company will now sell off the rest of its merchandise and close up shop. The company employs 30,000. It is the largest company so far to fail during this recession.
This article was provided by your payday loan source.
The closing of Circuit City is sad. They have been serving electronic goods to the public for 60 years. The company’s assets will be liquidated to pay off creditors. At least they’re going to do good on their part when it comes to paying dues.