Sorry media, the sequester isn’t sinking consumer confidence
Here is a good example of how the media (and others) turn liberal economic theories into conventional thinking.
Despite the best efforts of the administration and econ writers to frame stagnation as recovery, Americans remain pessimistic about the future. The Conference Board index of consumer attitudes fell to 59.7 this month from an already downwardly revised 68 last month. The figure missed expectations of 68.
In the short term, those expecting business conditions to get better over the next six months decreased to 14.4 percent from 18 percent. Those expecting conditions to worsen rose to 18.3 percent from 16.6 percent.
So, not good.
In the press release accompanying the new numbers, Lynn Franco, director of economic indicators at The Conference Board, states: “The recent sequester has created uncertainty regarding the economic outlook and, as a result, consumers are less confident,”
And here’s the lead of the Associate Press story: “Americans are less confident in the economy than they were last month. Pending deep government spending cuts have stoked economic uncertainty.” Reuters similarly focuses on the sequester.
Is this just the assumption made by the economist at the Conference Board or is there data in the survey that backs up the contention that sequestration is causing a drop in consumer confidence?
“There was not question about the sequester in our survey. However, these type of “shock events” (fiscal cliff, payroll tax, looming sequester, the S&P downgrade), tend to have an impact on the survey data and on confidence,” Peter Tulupman a spokesman for the conference board emailed.
It seems to me that folks too easily conflate serious economic shocks (a downgrade) with less shocking developments (a cut in the growth of government spending). If we’re making assumptions, why not assume that that our confidence is sinking because Obamacare and all its taxes are closer to implementation.
A Rasmussen poll found that only 12 percent of Americans believe the sequester has had a major impact on them personally. And the number experiencing a major impact was unchanged from week the sequester first took effect. If the president had been open to prioritization of sequester cuts almost no one would have noticed the cuts. Blaming sequestration for every economic hiccup (or worse) is going to become the hobbyhorse of a lot of people in the next few months. With or without evidence.
Follow David Harsanyi @davidharsanyi.