Why Consumer Confidence Isn’t a Solid Sign We’re Doing Better

It’s all about the real money.

I see this stat on Finance Twitter all the time: Consumer confidence. Every time, I want to groan into a copy of The Wall Street Journal.

It seems like a straightforward stat: We’re consumers. We buy stuff. The more we buy stuff, the more confidence we have in the economy. Easy!

Not so. There’s actually a lot of conflict around consumer confidence, despite it being up as of this August.

Consumer confidence at highest in nearly a year

I don’t buy into consumer confidence because people buying stuff tells us nothing. We all buy stuff. We’re buying more stuff lately. But jobs aren’t exactly plentiful at the moment. Wage growth is meh.

U.S. job openings fall to eight-month low in August

So how are we buying more stuff? There are two distinct possibilities: Savings and credit cards.

Not exactly a rosy picture now, is it? If I have to dip into my savings account to pay for a new laptop for work (which I’ve totally done before), it’s not a sign that I’m confident in my earnings. It means I’m doing what I need to do.

Is it really a show of confidence if I’m spending money right now even if it hobbles my future financial growth? Or worse, if I use a credit card and risk defaulting? I doubt it.

Consumer Credit Defaults Up Slightly According To The S&P/Experian Consumer Credit Default Indices

We all have to spend money at some level if we want to participate in modern society. If we spend more, that could be because we have to spend more to keep ourselves afloat, alive or in good standing with others. The reasons for spending money are too numerous and complex to simply be written off as a universally good economic indicator.

To replace consumer confidence, I propose we spend more time on a few other economic indicators—ones that are more grounded in the lives of everyday people.

Average vacation expenditure

Okay, part of this is coming from my seeing dozens of “save for a Disneyland vacation!” blog posts right now. But think about the last time you took a vacation. How much were you willing to spend on it? What felt like an indulgence vs. the necessity of relaxation? Were you even willing to spend money to relax? There’s so much feeling wrapped up in this little number.

Average credit card debt

I love this stat because it opens up so many potential skeletons in the closet for people. You can be making $100,000 a year, own a house and go on vacations. But if you have $15,000 of credit card debt to take care of? Something’s amiss in the economy. At least in your personal one.

American Household Credit Card Debt Statistics: 2015 – NerdWallet

Average personal income

We can’t focus on spending without also considering what we’re earning. What’s the average person making in your country? What percentage of higher earners might be skewing that number? We can do a lot with this simple little number.

America’s wealth gap between middle-income and upper-income families is widest on record

Earner confidence is just as important as consumer confidence, as is confidence that we can pay off our credit card balances and take time away from our jobs. Why aren’t we hearing about those? Until we get a few more numbers into our confidence metrics, I’m not confident that they represent any kind of growth. At least the growth all of us can see and feel.

Brit McGinnis is a copywriter and author of several books. Her work has appeared on XOJane, SparkNotes and anywhere fine stories are sold. She lives in Portland, Oregon.

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