8/31/2011 - Are Consumer Confidence Indices Useful As Leading Indicators?

The Capital Spectator
Link: Are Consumer Confidence Indices Useful As Leading Indicators?
"Consumer confidence fell to its lowest level in more than two years, the Conference Boardreports. That's a discouraging sign for the economy. No one's really surprised, given the various ills weighing on the economy, although some analysts doubt that such measures are all that valuable. "Consumer confidence usually is not a good indicator of spending," Edward Meir, MF Global senior commodities analyst, tells AP. "People may say they don't feel great but they still spend." Quantifying how consumers think is a fuzzy art under the best of circumstances, but that doesn't stop anyone from trying. There are several confidence measures to consider. A popular alternative to the Conference Board's index is the Thomson Reuters/University of Michigan survey, which has also slumped recently, falling to its lowest level in August since November 2008. Yet another reason for caution. How much stock should we put in such measures for gauging the future? Consumer confidence benchmarks surely deserve routine monitoring, but the standard caveat applies..." (Also read Interpreting the Current Market via the McClellan Oscillator.)