Why confidence?

Read the fine print next time you see a report about consumer confidence. This monthly index, put out by the Conference Board, a non-profit outfit once known as the National Industrial Conference Board, showed a sharp rise in December. The related “Expectations Index” rose from 77.3 to 91.5, against a base of 100 in 1985.

So the survey is said to show that the recession seems close to bottoming out, with a rebound likely by mid-2002. “The deterioration in current economic conditions appears to be reaching a plateau, led by a stabilizing employment scenario,” says Lynn Franco, director of the Conference Board’s Consumer Research Center.

How come such a rosy report when employers are still laying off workers by the thousand, when bankruptcies are increasing among some of the biggest corporations as well as just ordinary folks, when credit-card debt remains astronomical, when Christmas sales were down, when college graduates are scrambling to find starting jobs in or out of their fields of specialty, when the stock market is wobbling in only a slight rise from the depths when the tech bubble burst and the hijacked jets hit the World Trade Center?

The answer’s in the Conference Board’s fine print, which shows public confidence is not so high after all. The survey originates with something called NFO WorldGroup, which surveys “a representative group of 5,000 U.S. households.” It turns out that only 17 percent of this sample rated current business conditions as “good” – up from 16.8 percent the previous month. But those rating current conditions as “bad” also rose- from 20.7 percent to 21.7 percent. Those reporting that jobs were plentiful edged up to 17.6 percent, but 21.8 percent still said jobs were “hard to get.”

What did they say about the future economic conditions? Those expecting improvement by midyear increased, but only to 22.2 percent. A gloomy 11.6 percent thought things would get worse.

The employment outlook? The December survey showed improvement, but only 16.1 percent expected more jobs available in six months, against 19.3 percent who expected fewer jobs. Income expectations stood at 20.7 percent foreseeing a gain, down from 22.0 percent in November.

It’s hard to find much optimism in the report. Consumers are mostly tightening their belts, trying to get through a bad patch without much confidence in predictions of a mid-year upturn.