(Written with assistance of Grok AI. As always, this has been reviewed, edited, and had additional commentary added by me.)
Public surveys largely regurgitate what people have been told (and not what they know from their own experience) – this is a well-documented limitation of consumer-confidence and public-opinion surveys, especially on topics where most respondents have little direct experience or technical knowledge.
Here’s a breakdown of how accurate/useful these surveys actually are, and why the “media-noise echo chamber” critique is often spot-on:
1. Consumer Confidence Indices Are Excellent at Measuring Sentiment — Not Reality
- The major indices (University of Michigan, Conference Board, GfK, etc.) are very good at capturing how people feel at a given moment.
- They are highly correlated with recent media coverage, stock-market moves in the prior 1–2 months, gasoline prices, and political events.
- Example: After a string of negative economic headlines (even if the underlying data are mixed), confidence can plunge 10–20 points in a single month, and vice versa after a “soft-landing” narrative dominates the news.
2. Most Respondents Have Very Limited Personal Economic Data
- When asked “Are economic conditions getting better or worse?”, the average person is not looking at GDP revisions, payroll numbers, or leading indicators.
- They are answering based on:
- What they saw on TV/social media in the last few weeks
- Gas prices at the pump
- Whether their friends/family are worried
- Partisan cues (Democrats/Republicans often move in opposite directions after the same news event)
Multiple studies (e.g., Michigan Survey’s own analysis, papers by Carroll 2003, Barsky & Sims 2012) show that media coverage is one of the strongest short-term drivers of confidence swings.
3. Predictive Power Is Mixed
| What the index predicts well | What it predicts poorly |
|---|---|
| Near-term consumer spending on durable goods (cars, appliances) | Long-term economic growth or recessions |
| Holiday retail sales in the next 1–3 months | Stock-market direction beyond a few weeks |
| Political election outcomes (sentiment → turnout) | Actual unemployment or inflation 12–24 months out |
In short: Confidence indices are leading indicators of spending psychology, not leading indicators of the economy itself.
4. Partisan and Media Amplification Effects Are Massive Now
Since ~2016, the partisan gap in consumer confidence has reached unprecedented levels:
- 2017–2020: Republicans extremely optimistic, Democrats extremely pessimistic (despite the same underlying economy)
- 2021–2024: The reverse
- The gap routinely exceeds 50–70 points — larger than any actual economic differences would justify.
This shows that identity and media diet now dominate the answers more than personal economic experience for many people.
5. Real-World Examples Where “Media Noise” Clearly Drove the Number
| Period | Headline narrative | Confidence movement | Actual economy at the time |
|---|---|---|---|
| Mar–Apr 2020 | COVID lockdowns, “economy is dead” | Michigan index fell from 101 → 71 (biggest drop ever) | GDP did fall, but the sentiment overshot |
| Late 2021 | “Transitory inflation” → “inflation is out of control” | Confidence collapsed from 80s to low 50s | Real wages were down, but jobs were plentiful |
| Mid-2023 | “Soft landing is here” narrative | Confidence rebounded ~20 points in two months | Little fundamental change in data |
Bottom Line
Consumer confidence surveys are:
- Extremely useful for gauging short-term spending psychology and political mood.
- Often misleading if you treat them as objective readings of economic health or future growth.
- Heavily contaminated by media narratives, partisanship, and whatever story is trending on social media that week.
They frequently “regurgitate media noise with a negative slant” — is supported by decades of research. They are more like a national mood ring than a precision economic instrument. Useful, but you have to know what you’re actually measuring.
