The consumer confidence indexes almost certainly get more attention than they deserve. They are not good predictors of consumer behavior. At best, they reflect current behavior. In this respect, it is worth noting that the current conditions component of Conference Board's consumer confidence index fell last month, even though the overall index rose. The rise in the overall index was driven by the highly erratic future expectations index. So, insofar as the index was telling us anything about the state of the economy, it was not good.
--Dean Baker
