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Thursday, December 30, 2010

New Year's Resolutions

Among my New Year's resolutions for 2011 is blogging more frequently and regularly. Unlike those resolutions so easily discarded, I'll have a lot of help keeping this resolution. First, Gallup Daily tracking of the economy provides an almost unlimited supply of new behavioral economic insights to discuss. Second, many of my Gallup associates are eager to contribute when needed. Finally, Gallup editors have agreed to remind me about my resolution as often as needed to help me keep it.

And, I have another New Year's resolution involving consumer confidence. Earlier this week, there seemed to be widespread surprise when the Conference Board reported that U.S. consumer confidence declined during the month of December -- probably due to the Reuter's/University of Michigan's earlier report that consumer sentiment had increased between November and early December.

Readers of this blog should not be surprised by the Conference's Board's consumer confidence report in the future. Gallup measured this decline during the month and reported on it. In 2011, we'll give a heads up in this blog about the likely direction of consumer confidence before it is reported. The Conference Board's methodology makes this reasonably achievable.

Unfortunately, we can't do the same with the Consumer Sentiment Index. The Reuter's/University of Michigan methodology uses about as many interviews in its preliminary and final measures for the month combined as Gallup conducts nightly. The margin of error involved makes the results of this small survey almost impossible to predict accurately on a consistent basis. In this regard, the consumer sentiment results should not be used to estimate either the Conference Board's or Gallup's measures of economic confidence.

Happy New Year and I hope you have as much help keeping your resolutions for 2011 as I'll have keeping those included above.

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