Saturday, April 30, 2011

Gallup's Economic Confidence Index is Terrible

Mired in debates at Debate Politics, I constantly have to get involved in arguments from progressives who say that Obama has not been terrible for the economy. The main statistics that I hear are the stock market and GDP. Let us get one thing straight: these are terrible measures of economic well-being. GDP counts a dollar spent by government to be just as good as a dollar spent by individuals. Let me ask, was a dollar spent on Mount Rushmore just as good as a dollar spent for food by a hungry family? Absolutely not, so then why do we not dock government spending at all? In our case, of course GDP is going to rise, look at spending over the last few years! Are we better off for it? It is debatable, but I have not seen the benefit. And the stock market could easily be in a bubble because of the monetary inflation from the Federal Reserve. I see it as poised for another crash (commodities spared). And how many of the companies in the stock market are only around because of direct injection of money from the government? The stock market, then, cannot be used to measure well-being.

Then what can we use? There is no perfect measure, but Murray Rothbard's Private Product Remaining (PPR) is a great measure. It is a little too negative, but I like it. Unfortunately, I cannot find updated statistics on it. As an alternative, I like Gallup's economic indices. They are a great source for real unemployment numbers, and also have a great measure called the Economic Confidence Index. It combines the responses of their Economic Outlook Index and their Economic Conditions Index. The result? The Economic Confidence Index is at its lowest point since September of 2009. Where is the improvement? Surely if Obama was doing a good job we would see these numbers getting better, but they are clearly getting worse.

Yes, I realize that these numbers are based on opinion and not fact, but you cannot deny that unemployment is not getting better and that federal debt is getting out of hand. And as for a more robust measure, how about Consumer Spending? It has not changed much since September of 2009, except that now people are spending more on gasoline and food. That means that spending on other things has gone down, and so people are getting less. Quality of life, therefore, is decreasing. The facts are out there, stop trying to deny reality.


  1. Spot on, Tony. Progressives love easy answers, and on an economy, there are none. I like to ask one like you were arguing with, OK, if higher GDP is better, why don't government just spend a few more trillion? Same with "creating jobs." I love to ask them "why don't we solve the unemployment problem by having the government hire everyone?"

    Your statement in your Profile "I'm a libertarian, but more importantly my politics are internally consistent" is redundant. Internal consistency is what attracted me to libertarianism.

    Maybe, in a takeoff of Descartes, it should be: I am a libertarian, therefor my politics are internally consistent!" ;)

    Good blog!

  2. Thanks for the vote of approval. A completely logical system is what too attracted me toward the Austrian school of economics. It is just disregarded and cast out by many, but it's a shame as that school has a lot of good stuff.

  3. Great post Tony. This is why they are having such a hard time selling their economic snake oil. People feel the pain of higher gas prices and food prices. They see corporations laying off and the growth of small businesses in our country is stagnate. The Obama team can only spin their tale of an economic rebound for so long with people seeing and feeling the pain of an anemic economy. I have added your site to our blogroll at the SENTRY JOURNAL.

  4. "I realize that these numbers are based on opinion and not fact"

    When it comes to matters that affect people's wallets, what better barometer is there than public opinion? Great post, Tony.

  5. Thanks John, I really appreciate it. I'll make sure that your blog is followed in my sidebar as well.

    Jim, I thought that the progressive response would be that the perception did not match reality. However, in this case it does as the reality is abysmal.

  6. The chart says it all; the economic outlook may be poor, but the name of your blog is great, encompassing as it does 3 of my favorite subjects...

  7. I'm glad you like the title. In terms of posting I've been a little slack with the baseball and beer side of things, but hopefully with baseball season in full swing that will change soon.

    Yes, the economic outlook is horrible, yet it does not get the attention it deserves. The media instead follows the deeply flawed government statistics.