Consumers shoppingTwo statistics released on Friday highlight the growing disconnect between what the average man (or woman) on the street is seeing and what the economic data appear to be telling us.

On the one hand, those who believe the economy is on the road to recovery -- albeit more slowly than many would hope -- will point to the latest data on consumer spending as a sign that things are still on track. While adjusted retail sales rose a slightly lower-than-expected 0.4% last month, the year-on-year gain was a healthy 5.5%, the ninth straight monthly increase.

Pessimists, meanwhile, might note that the most recent report on consumer sentiment from the University of Michigan revealed that Americans remain concerned about the economic future. The headline index for July rose to 69.6, beating estimates. But that measure is below the 76.4 level seen in November 2007, just before the recession began, and more than 20% below its long-term median.

In fact, if you compare the two series going all the way back to when the Census Bureau first started reporting monthly retail sales, the recent divergence is striking.

The obvious question, of course, is: Which data give us a better sense of what's happening with the economy. Are consumer sentiment surveys like this one and others, including the polls published by the Conference Board and Gallup, painting an unrealistically dire picture of where things stand? Or are the "official" statistics on consumer spending giving us an artificially inflated reading on the consumer's pulse?

Given all the other evidence we've seen lately, including last week's dismal jobs data -- not to mention the fact that ordinary Americans have been ahead of the curve as far as the economy is concerned since before the financial crisis started -- one has to assume that it won't be long before we'll soon be seeing a different sort of pattern emerge in some of the official statistics.

Watch out below?

Increase your money and finance knowledge from home

Portfolio Basics

What are stocks? Learn how to start investing.

View Course »

What is Short Selling?

Make a profit when stocks prices fall.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

dont put a lot of stock into the red curve that is shown. its most likety bogus and a result of fradulent manipulation by the washington/wall street morons. dont believe everything that you see, read and hear. public sentiment is the only accurate gauge on where this country is headed....south.

August 16 2010 at 11:06 AM Report abuse rate up rate down Reply

Opinions are like belly buttons; everybody has one. But a meaningful assessment of opinion is by no means an exact science. The answers a pollster gets will depend not only upon the intelligence and informed level of the respondant, but several other factors having nothing to do with the question being asked. The mood of the respondant, the way the question is worded or asked, even the time of day can affect the answer. The better answer to what consumers are thinking is to be found by following the money, how much and on what are they spending it.

August 15 2010 at 7:49 AM Report abuse +4 rate up rate down Reply

Just what I would have expected. When the recession began, prices began to rise dramatically. However, as more and more people became unemployed, their purchasing power lowered. So did their confidence. The mood of the consumer tanked. One single business can demonstrate this graph simply. The movie industry. Almost monthly a record is broke in the amount of money a new release in a particular time frame. Like the record for a weekend, or midnight showing onward, or in two weeks running, etc. And story in the media circulate on how the latest movie is some 10's of million over the previous record holder. BUT, look at the number of tickets that particular movie sold compared to the previous record holder sold, and there is a different story. Ticket sales is down 4 percent. Which means either more people are becoming more disallusioned with movies and not buying or they just can not afford movie tickets because of such a thing as unemployment. Yet the price of tickets go up to fill in and make all this record breaking possible. Money take in is the story we here. Where are the numbers of ticket sales per movie per week? No place to be found. Your graph also demonstrates this perfectly.

August 14 2010 at 8:10 PM Report abuse +1 rate up rate down Reply

Did you ever look at the statistics of lotto winners that won millions 1 year and were broke a short time later? these are the same people that obama" wants to give money to over, and over like the poor children you see on tv with the big bellies starving in africa i feel bad for them but the minute you stop feeding them they stave so maybee we sould just give them birth control pills insted the point is the dems have always givin insentives for the poor to have more children to give more money. meanwhile responsible middle class are having 1, 2 children so we are having a population of children of broken familys and you wonder why the dems are doing anything right or wrong to get votes? cause their the same as the lotto winners the wont know what to do if their off the goverment dole

August 14 2010 at 12:41 PM Report abuse rate up rate down Reply
Fed up Senior

Let's see......consumer confidence is down, unemployment continues to rise, Obama continues to pee on our legs and tell us it is raining, the Dems are STILL blaming Bush, confidence in congress is in the sewer, and Obama refuses to rein in out of control spending. WOW!!! Face it folks, we are in a DEPRESSION and cannot get out until we oust the Democrats. Let your voice and dissatisfaction be heard in November.

August 14 2010 at 10:20 AM Report abuse +5 rate up rate down Reply

I am certain that consumer sentiment and consumer spending will greatly improve when we start to see some real improvement in the employment situation. Let's push our elected officials to take actions that create jobs within our borders.

August 14 2010 at 9:38 AM Report abuse +4 rate up rate down Reply

the figures are made up and bogus ,,,,the stores are empty ,,and the average percon has no money ,,,,we are in a depression and everybody know it ,,

August 14 2010 at 8:41 AM Report abuse +4 rate up rate down Reply

there will be no consumer confidence or any other kind of confidence as long as we have an incomprehensible national debt, as long as both parties in Congress keep deficit spending, as long as The Fed prints and dilutes our dollar and as long as they manipulate stock prices, gold prices and interest rates. we need to vote out all career politicians and vote in fiscal conservatives and we need HR 25/S 296. a fair tax. look it up online and educate yourself. this will let the people keep the money and power instead of sending it express to Washington! come on people!

August 14 2010 at 7:10 AM Report abuse +5 rate up rate down Reply

The buyer has always known more than the ivy league egg heads that call themselves
There are not many business type in this administration just " great thinkers "

August 13 2010 at 7:30 PM Report abuse +5 rate up rate down Reply

Look at where the numbers are coming from, where does the survey numbers come from and where does the retail sales numbers come from. My guess the survey is local and small. The retail sales number is more broad. Economy in one part of our country is much different than another.

August 13 2010 at 7:09 PM Report abuse +4 rate up rate down Reply