The country's falling apart, but still we shop.

Photographer: John Taggart/Bloomberg

On the Wrong Track, But Confident About It

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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Most Americans are convinced that the country is in trouble. In an NBC News/Wall Street Journal poll released this week, 62 percent agreed that "things in the nation are ... off on the wrong track." Other recent polls, including Bloomberg's, have delivered similar results.

This sour mood isn't new -- it even predates the financial crisis of 2008. But it is increasingly at odds with data that show the U.S. economy creating lots of jobs and leading the world in growth. "Americans should cheer up!" Politico Magazine's Michael Grunwald wrote last December in a piece that reeled off a long list of positive trends in the economy and other areas. But according to the political polls, they haven't.

Then again, the Conference Board came out with its monthly index of consumer confidence Tuesday and it rose again, despite the stock market's woes. The index is now four times higher than it was at the depths of the recession in early 2009.

So which is it? Is everything falling apart or is it getting better? The Conference Board asks people questions about their own economic situations; the NBC/WSJ survey asks for their assessment of the country as a whole. As such, the consumer confidence survey probably gives a better reading, as people tend to know more about their own situations than about the country as a whole. 

Still, if you go back further, it's clear that isn't the entire explanation. In the chart below I use Gallup's series on satisfaction "with the way things are going in the United States," which goes way back. These are the people who think the nation is on the right track.

Over time, the two series do move somewhat in tandem. There are exceptions due to the fact that the satisfaction measure isn't just about the economy -- it spikes when the nation rallies together in the face of an external threat, as during the first Gulf War in 1991 and after the Sept. 11 attacks in 2001, even as consumer confidence temporarily plummets. I also get the impression that consumer confidence is more cyclical and satisfaction more secular.

You can see this during the economic recovery that began in 2001. Consumer confidence rose with gross domestic product, but the steady decline in satisfaction showed that people weren't buying it. They didn't think the strong, lifts-all-boats economy of the late 1990s had returned, and they turned out to be right about that.

You can also see the difference, though, at turning points. Satisfaction remained high in the early 1990s and early 2000s even after the economy had fallen into recession and consumer confidence plummeted, and it remained low in the mid-1990s even as the recovery picked up steam. It apparently takes a while for people to fully digest changes in the economic picture.

So that's the big question now. Does the growing gap between consumer confidence and satisfaction indicate that the current recovery isn't all that it appears to be, or just that people are once again being slow to recognize a shift? We'll know in a few years.

  1. The gaps in the two lines in the chart are due to differences in the data series. The Conference Board measures consumer confidence every month; the NBC/WSJ pollsters sometimes skip months and sometimes (when an election is nearing, usually) run two surveys in one month.

  2. Once again, the gaps in the blue line are because Gallup hasn't asked the question every month.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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Justin Fox at

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Paula Dwyer at