Why Consumer Confidence Is Key to Fighting Inflation

Why Consumer Confidence Is Key to Fighting Inflation | WSJ

Рет қаралды 77,037

Жыл бұрын

Consumer confidence, sentiment, expectations… Whatever you call it, the measurement of how consumers are feeling about the economy is being closely watched by the Federal Reserve.
Why? Because consumer confidence can be a self-fulfilling prophecy: If enough people think inflation is going to get worse, it likely will get worse.
WSJ looks at how the two main measurements - the consumer-sentiment index and the consumer-confidence index - are calculated, and why Federal Reserve Chairman Jerome Powell has to not only bring down inflation, he has to make the public confident that he will.
Read more about why the Federal Reserve is trying to keep public confidence high on The Wall Street Journal: www.wsj.com/articles/why-cons...
Illustration: Adele Morgan
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Пікірлер: 114

@AUstinnesc 7 ай бұрын

Market breadth is still weak, but leading stocks did well, with more clearing buy points or setting up. I find myself at a crossroads, uncertain whether to liquidate my $150,000 stock portfolio. I'm seeking advice on the best strategy to capitalize on this current market.

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@nycto16 Жыл бұрын

Psychology and Economics two of my favorite fields to study! I'm studying business which has both...

@djsmithe Жыл бұрын

To me, this has always been obvious. Happy people spend money, worried people don't. When people spend money, the GDP goes up. When people don't spend money, the GDP goes down. Here's the problem. People get too happy and spend a lot of money. Then the money runs out and they get worried.

@alberthunecke5100 Жыл бұрын

Another angle on your type of story. Happy people spend money, worried people don't. When people are happy, demand goes up. When people are not, demand goes down.. Here's the problem. People get too happy and aggregate demand exceeds GDP. Then the supply runs out and prices go up.

@jhonprice3786 Жыл бұрын

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@myrandacollins9025 Жыл бұрын

thanks for telling me

@ReynaSingh Жыл бұрын

… economics has never been a hard science. It’s an emotions game, if no one thinks they can afford anything, then what good are any economic principles

@saahiliyer11 Жыл бұрын

It’s a social science. What good are all these models predicting human actions and incentives if you strip away the humanity? It’s not “an emotions game” as you crudely put it. But people don’t pursue economic decisions they don’t know are there. In the quantity theory of money, the monetary side of the equation is M*V, money supply times money velocity. Money velocity is how fast a dollar circulates through the economy, and that’s determined by people’s spending habits. If people think inflation will only get worse, then they but more now and lo and behold V is shooting up, making inflation worse.

@FinancialShinanigan Жыл бұрын

You mean "consumers need to be confident getting more into debt"

@MelvinSujo Жыл бұрын

Well, wouldn’t confidence in taking on debt in aggregate also imply confidence in ability to pay off debt?

@velvetypotato711 Жыл бұрын

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@newcreationinchrist1423 Жыл бұрын

Prices are up, likely won't go back down so yeah. Not feeling too confident myself about the economy either.

@joeysmit4644 Жыл бұрын

Hey WSJ, do you have data about how many hours of pay of the average workweek goes to general expensese (like housing, food, gas etc.). 60 years ago, a 1 income (40 hours per week) could support a family with everything they needed. Since then the average hours worked per household has been increasing steadily, up to the point where both adults have to work 40 hours per week. Is there something of a relationship between the price of necessary expenses (like I stated above) and the amount of hours worked per household? Perhaps a % of total income that remains steady or increases, meaning that it doesn't matter how many hours you work, extra time in your job will not result in extra luxuries.

@markciappesoni3165 Жыл бұрын

Personally I believe there is many more luxuries that are affordable for a larger portion of the population than there was 60 years ago. Due to technology and increased productivity.

@mountains889 Жыл бұрын

hey Joey, tell me how much stuff, we now consider a right or essential to life was necessary to life 40 years ago

@alparslankorkmaz2964 Жыл бұрын

Nicely explained.

@Wyatt277 Жыл бұрын

Great story, thanks for sharing

@skjoldgames Жыл бұрын

"...consumers, workers are the backbone of the economy." So that's why we make sure the working class health care workers, teachers, trades and agriculture workers stay at the bottom rungs of society. I guess when the head gets inflated and heavy, the backbone bears the weight.

@jaydibernardo4320 Жыл бұрын

Well explained video, good job WSJ.

@danielpalos Жыл бұрын

Equal protection of our own at-will employment laws for unemployment compensation can help with confidence issues.

@myrandacollins9025 Жыл бұрын

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@PhilipMurray251 Жыл бұрын

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@Robertgriffinne Жыл бұрын

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@Natalieneptune469 Жыл бұрын

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@Natalieneptune469 Жыл бұрын

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@ramatuaudu5058 Жыл бұрын

The rich stay rich by spending like the poor and investing without stopping then the poor stay poor by spending like the rich yet not investing like the rich..

@ryanjoe3821 Жыл бұрын

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@ramirezjunior2369 Жыл бұрын

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@AaronsTalks 7 ай бұрын

Thank you

@3qguru Жыл бұрын

Excellent explanations! You made it clear the fate of consumer confidence lies on the shoulders of J. Powell's vibe. May he and all beings be at peace and at ease, knowing each new day is a chance to be a good person.

@Worldaffairslover Жыл бұрын

One of the best videos I’ve seen

@mollygiovanna1095 Жыл бұрын

They didn’t mention everyone’s 401k balances being down. That’s also part of the negativity.

@millevenon5853 Жыл бұрын

Inflation cares about your feelings

@saahiliyer11 Жыл бұрын

If you think inflation is going to rise, you and everyone else buy more now, spurring faster circulation, letting companies know people will buy and higher prices, and now everything costs more. Yeah, inflation cares about your feelings. Because if enough people expect inflation, they will create inflation.

@GenXamerica Жыл бұрын

It went to an all time low in February. Why are we not hearing about consumer confidence at all in main stream news?? It’s all we heard about for years. Misinforming the people and it’s criminal.

@vladgnatenko4711 Жыл бұрын

Thank you for explaining consumer confidence index, wasn't covered in macro econ class ahaha

@mr.adubes9921 Жыл бұрын

Quick and Simple explanation on a topic I always wanted to know more about

@kristensorensen2219 Жыл бұрын

When gas goes from 45 cents/gal to over $5 a gallon in 50 years that makes me angry! The Federal Reserve is printing too much!!

@bobthemagicmoose Жыл бұрын

I'm calling BS on this. She says consumer confidence does a really good job at anticipating GDP. Looking at the graph, they are loosely correlated but the index does not lead GDP. As my econ professor once said "any discipline with the word 'science' in it, isn't".

@cmlon Жыл бұрын

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@mariebunel8617 Жыл бұрын

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@janewoodley136 Жыл бұрын

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@mariebunel8617 Жыл бұрын

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@janewoodley136 Жыл бұрын

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@hsingkao2024 Жыл бұрын

Is a sentiment or confidence index about the government or society in general?

@moyo2850 Жыл бұрын

lol, powell's best idea is fake it till you make it. I love it! We are all doomed.

@dunny2210 Жыл бұрын

I love the Fed is playing mind games hoping consumers don't realize it, and in the meantime, WSJ is disclosing that the Fed is playing games and don't want you to buy more, etc. I wonder how it will work out and how consumer will behave after knowing that they are trying to control their behaviors.

@saahiliyer11 Жыл бұрын

I mean, it’s not a huge secret, and the Fed is backing up their statements with actions. They’re putting in their work with interest rate incentives, so it’s not simply “playing mind games”.

@auro1986 Жыл бұрын

ask why not. what confidence will be there in consumers if you dictate what they must have after filling up market with infinite brands and products?

@SavingsMinusDebt Жыл бұрын

Feelings and math have nothing to do with each other.

@josoffat7649 Жыл бұрын

How are we supposed to have confidence when our nation leaders are intent on tanking the economy?

@thomasvankuiken6266 Жыл бұрын

You already have it. I'm a claims adjuster and see it every day. This is not wizardry, it's common sense.

@deebee5984 Жыл бұрын

Behind all these economic numbers are machines, robots, automation, energy - Advanced Manufacturing

@zhangwei4622 Жыл бұрын

I've lost confidence in the US dollar.

@NolanJohnson423 Жыл бұрын

The rest of the world hasn’t clearly

@ajshaka3212 Жыл бұрын

I answered all survey questiond negatively in the vid...lol

@QwkDraw Жыл бұрын

For decades, the confidence in the US economy has been built on a false foundation of wealth and prosperity. Now, that foundation is developing very serious fractures as confidence is collapsing due to overspending and otherwise very poor financial management.

@BoydGilbreath Жыл бұрын

Price gouging is not inflation.

@SelectKiko Жыл бұрын

Spent a good 14 seconds trying to clean that speck in the lower left third off my screen.

@davidmotyka2708 Жыл бұрын

Consumer confidence when you are on a fixed income and inflation is high is low.

@rcdriver107 Жыл бұрын

TREAT every single day as if though we are in a very deep, very harsh recession like regardless!! Inflation is NOT transitory - rather, it is permanent for sure!! Some form of pessimism is good for us and is INDEED WISE like regardless!!!!

@auro1986 Жыл бұрын

then there is your advanced technology and always demanding new new things

@fungkh1625 Жыл бұрын

Finally first one

@arcano9297 Жыл бұрын

Nah its just a band aid

@tintinjailhouse1312 Жыл бұрын

If ya dont understand THEN what are ya doing now Soooo?

@thekeith-donovanexperience Жыл бұрын

I’m saving 65% of my pay, don’t trust none of them.

@importantname Жыл бұрын

is confidence based on ignorance or knowledge? Or just spend no matter what is happening in the World?

@p_hat Жыл бұрын

consumer sentiment is falling because of CPI, and who our current leadership is and how THEY're approaching it. Americans don't listen to Jpow. They're focused on our current president, and the lack of trust we have that he'll lead us out of this. His approval rating is a key indicator, and it's only fueling the fire with low consumer confidence.

@moribundmurdoch Жыл бұрын

If you vote for the libertarians, everyone will be confident that inflation will stop. A balanced budget, no more printing of money, and free banking are all things that will lower inflation.

@saahiliyer11 Жыл бұрын

The balanced budget thing, that’s not exactly an inflation fighting tool. And a small amount of inflation is necessary to spur economic activity and investment, hence the 2% target and why deflation is an “avoid at all costs” phenomenon. As for free banking…🤣🤣 HAVE YOU SEEN THE SHITSHOW THE CRYTPO MARKET IS IN? If that’s not an exceptional model of free banking, I don’t know what is. I mean it’s just scam after scam after scam after scam. There’s a reason why we ditched free banking, and it’s got nothing to do with shadowy figures and backrooms. It. Didn’t. Work. A lot of average people were wiped out when scam banks or small banks went belly up with no insurance and no oversight. You’d have to be insane to think THAT, out of literally ANYTHING in the world would magically work now and “eliminate inflation”.

@yivunqp963 Жыл бұрын

You mean spend like there is no tomorrow so that the rich get continue to be rich.

@polgoso Жыл бұрын

what if all they asked were bragging????

@nakosimpson7459 Жыл бұрын

Popopoo

@knife3 Жыл бұрын

🇭🇺✊🏻

@YourMom-vl2sp Жыл бұрын

America just mad they are not getting free money this year 🤣😂

@neilwalker3113 Жыл бұрын

We are already in a big crash, and inflation is a disaster. The CPI report is a colossal failure. To bring the housing market to a halt, the FED will have to pull out all the stops. The unfortunate reality is that other markets are being decimated. Diversification is essential if you want to stay green. Right now, crypto derivatives trades are the only thing in my portfolio that is performing well and making me money.