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There’s a Difference Between How People Are Feeling And What They’re Doing

A 'Now Hiring' sign outside a outside a Casey's General Stores Inc. gas station.

A 'Now Hiring' sign outside a outside a Casey's General Stores Inc. gas station.

Photographer: Luke Sharrett/Bloomberg

The economy is clearly confusing right now, and one reason for it is the gap between measures of sentiment and actual activity.

So for example, we know that consumer sentiment is terrible. Last week’s University of Michigan number came in at its worst level in history, below even the depths of the Great Financial Crisis. But also, it looks like discretionary spending in the US remains robust. People are buying airline tickets, spending on hotel stays, and going out to eat — all of the types of behaviors you would expect to see in an environment of high consumer optimism. Just yesterday, Bank of America’s CFO said that consumer lending and spending were in good shape.