President Obama may be encouraged enough by some rising measures of consumer confidence to celebrate those improvements in his economic speech today. It’s a place where he’d best tread lightly.
The challenges cut both to measurement and politics. In the former, there are two very different aspects of consumer sentiment – views of current conditions and expectations for the future. Conflating them can be misleading. And in the political equation, there’s little so risky as to be seen as out of touch with the public’s economic pain.
First to confidence: Views of current economic conditions are rooted in reality – at current, a harsh reality of job cuts, stagnant or declining pay, shrunken investments and pinched opportunities. Consumer views of current conditions remain dismal – very near their record low in our 23 years of weekly tracking in the ABC News consumer index.
Expectations are a different matter; hopes for tomorrow are far less anchored by today’s conditions and more apt to include other considerations, including political views. Indeed there’s been a powerful political component to the sharp drop in pessimistic expectations, and the more tentative rise in optimistic ones, since last fall. Obama supporters (Democrats, but also a majority of independents) are far less glum. But the president’s critics (chiefly Republicans) have not joined the party.
Expectations, then, are less a rating of where the economy’s going than of where people, informed by their political predispositions, hope it’ll go. Good hopes can help; if falling pessimism gives way to substantially rising optimism, that can signal the path forward. But it also can be simply the first steps of what remains a very long walk.
Some measures of consumer confidence combine both current sentiment and expectations (ABC’s CCI does not – we report them separately). Given our own expectations data, such indices seem likely to show a rise. Take it for what it is – but no more. Confidence in current conditions, the indication of real recovery, can take years to achieve.
The political equation informs all this. The first President Bush spent 1992 declaring that the recession of those days was over, and technically he was right. But the recovery had not made itself felt on Main Street; that took another two years. All Bush accomplished was to make himself seem out of touch. Adios, re-election.
There’s another cautionary note for Obama. Some polls have suggested the public will be patient with his economic efforts. I’m skeptical. We can ask people what they think now; asking what they will think later is a dicey proposition at best. Reality will be informed by events unforeseen. But the best analogous data we have is for Ronald Reagan, whose approval rating fell by 25 points in 10 months in the recession at the start of his first term.
So much for patience; what’s needed is progress. Tangible results are where Obama will best focus – with an optimism that’s tempered by a mighty effort not to get ahead of the public’s own perceptions.