When all you read is gloom, turn here for a much different perspective.

Saturday, January 31, 2009

Why Is Confidence Building Again?

"Enthusiasm is Contagious, And So Is The Lack Of It" - Unknown

You've recently read that consumer confidence is now "surprisingly" up. You also may have already noticed that the propensity to report good news also seems to be increasing slightly. (At least in the blogsphere)

Why is this? Because of at least these five factors:

1. There was a basic mistrust of our past president and his administration's ability to do anything meaningful. The honeymoon may be over soon for Obama, but no one can deny that the majority of the US population (and quite possibly the world's) is still enamored with their new bride. The president's job approval ratings are in the 60s, nearly double that of Bush's when he left office several days ago.

2. Since the "big chill" in October, consumers have had plenty of time to re-adjust their spending patterns and reexamine their budgets. Now that they are confident that their personal small town bank is not going to fail and that their fuel and transportation bills are drastically lower, they're able to look beyond the gloomy media headlines and make their own forward-looking judgments. When looking at their personal budgets there is a lot less uncertainty than in October -- no significant new reason to "wait and see," like there was back then.

3. Even as many corporations announced their restructuring plans this past week, significantly more than 90% of people still have their jobs. Additionally for those jobs that are being cut, many carry extended severance payouts that can last for months. If you work in a corporation, you were waiting for the next shoe to fall right before the holidays or right after. You've seen it before during recessions. (and expansions) Year-end is typically when more than any other time all eyes are on the books and human assets get "re-deployed" or cut. For those who have now made the cut, year-end is behind you and the 2008 full-year earnings season is also past. But perhaps more noteworthy is that corporate job holders are currently now observing their internal and external job boards swell with openings for talent that will match corporate growth and income goals for 2009.

4. Beyond just the Obama motorcade, the wheels in DC are turning again. Even though their is political partisan's opposition to the stimulus package, the average US citizen just wants something to get done. Given the make-up of the house and senate, much new legislation no doubt will become law. The public is willing to wait to see if the new policies work, but in the meantime, confidence will improve merely because something -- anything -- is getting done by a new administration and congress.

5. There is growing belief that new energy policy could be just as significant as the computer boom, the Internet boom, or Y2K consumption driver. That burgeoning innovation is making its way into:
More efficient and plug-in cars
Hybrid car batteries.
Decreasing photovoltaic solar costs.
Steadily increased manufacturing of wind farm componentry.
Clean coal advances.
New electrical, transmission, aggregation and right of way assurance planning and implementation.

Obama has an incredible opportunity to demonstrate trustworthiness and speak with clarity to improve consumer confidence. His vision of how to improve the US economy -- perceived or actual -- can have an immediate, on-going and growing impact on public morale.

No doubt you believe it is just fine for us to publicly call on Obama to assist with the psychology of consumer sentiment. Kennedy did it, Reagan did it, and there is every indication that Obama can do it too.


  1. Thanks for these great observations. We can also add that the Fed has signaled it will do everything it takes to get things moving, from a dramatic increase in the money supply to near 0% funds rate. Plus, the credit freeze has thawed to near normal levels (LIBOR and TED spread). That's a lot of fuel for the fire! -Joe McK

  2. ...And let's not underestimate our incredible capacity for innovation! Remember, Microsoft was started during the downturn of 1975, the PC revolution exploded during the downturn of 1980-82, and the commercial Internet began to explode after the downturn of 1990-92.

  3. Why can't you link to individual articles on this website? All 'normal' bloggers do, it is handy to post links to the articles on this weblog so why can't that be????

  4. Mmm... sorry to hear that you can't that is not my intention... I know that others do...

    Send me a note via email and I can walk you through the steps...

    For instance today's article can be accessed at:

    Thanks for linking!

  5. Also Anonymous,

    I'd be happy to provide a link-back to your site, if you are referencing any article here.

    See many of those readers and "linkers" listed below...


  6. No, I think it was because people were too busy worrying about the Super Bowl.

  7. Junior,

    Most folks I was with were not worried.

    So sorry your AZ Cards lost. I don't think Ken Whisenhunt will succeed in his request for bailout funds for the team.

    It's highly likely tho that the state will succeed with their request for assistance.

    Hope it directly helps you... and indirectly the Cards and the D-backs. See you at spring training.

    Go Rockies.


  8. I check your site daily as it keeps me sane. Why are the things you cite not in the headline news? It is like mainstream media WANTS everything to fail. The more we can get this kind of news out there the better. I encourage everyone to send a link to this blog to everyone they know!

  9. I think that there may be a bias toward bad economic news because it helps sell government intervention, such as the large stimulus bill now pending before Congress. If the press reported the good economic news, the politicians pushing for bailouts and stimulus wouldn't be able to sell it to the public. I would imagine that we'll see more good news once the stimulus bill is passed.


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