Mis-reading confidence
Posted by: Matt Nolan on: December 8, 2008
What the hell is with the headlines saying “Confidence surges post-election” and “New Zealand Consumer Confidence up 5.9 pts to 105.6, after John Key’s election as New Zealand’s new Prime Minister“.
I’ll tell you why consumer confidence rose in November – retail petrol prices fell 15%. I wouldn’t have minded the random conjecture that a change of government made consumers confident – as I would expect a small boost myself. However, they completely ignored fuel prices – how can Roy Morgan tell us what to do with interest rates (which he does every two weeks) without understanding the important relationship between petrol to real incomes and confidence.
How can they seriously think that the election was the primary source of this confidence boost – I’m startled!
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5 Responses to "Mis-reading confidence"
December 9, 2008 at 12:04 pm
I definitely pay attention to the data – fortnightly confidence readings are too good to pass up 
December 9, 2008 at 3:05 pm
He may be on the mark with this one. The question on right vs wrong direction for overall country also moved by much the same amount, and that is very much linked to change of govts historically.
December 9, 2008 at 3:08 pm
“He may be on the mark with this one. The question on right vs wrong direction for overall country also moved by much the same amount, and that is very much linked to change of govts historically.”
But if we dig deeper and look at the reasons why consumer confidence increased we see two things:
1) People feel like they have higher incomes now,
2) People feel that it is a good time to buy big ticket items.
I would attribute these movements to a slashing of the OCR and lower fuel prices.
If the confidence boost was solely based on the “outlook” for economic growth and own incomes it would be fair to pin this no the election – but those statistics did not improve. In fact the outlook for own income fell!
I should have made this more explicit in the post – I will keep that in mind
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Matt Nolan
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December 8, 2008 at 6:32 pm
This guy has an over-valued sense of his own importance. I look at the data but ignore his ignorant commentary!