Conflicted Consumers? Two Big Surveys Diverge Sharply

It’s hard to tell how confident consumers truly are if you go by two of the most cited national surveys, released within days and giving sharply different outlooks.
The Conference Board today said consumer confidence fell further in May, declining to 64.9 after peaking in February at 71.6.
On Friday, however, surveys tied to the Thomson Reuters/University of Michigan index found that U.S. consumer outlook has improved in each of the past nine months.
So which one’s right?
Economists say that both surveys usually give similar results over long periods of time, but are subject to short-term variations based on several factors, including consumer prices, the stock market, employment reports and, most importantly, timing.
In this round of surveys, gas prices and timing had a lot do with the contrasting results.
According to the Associated Press, here’s a few of the factors:
Timing: The Conference Board completed its survey by May 16; the University of Michigan’s was more spread out throughout the month. In its earlier version, the Conference Board probably missed the recent declines in gas prices. The University of Michigan survey was more optimistic based on cheaper gas at the pumps.
Numbers: The Conference Board surveys 3,000 people; the University of Michigan surveys 500.
Scope: Both surveys ask similar questions about current business conditions and the jobs market. They also ask whether things will improve or worsen in future months. Both ask about large-scale purchases. Overall, though, the University of Michigan survey asks more questions and gets more detailed information.
History: The University of Michigan survey yields a bigger impact from gas prices, while the Conference Board is more sensitive to the job market gyrations.
Volatility: The Conference Board’s index moves higher in good times and falls more sharply in bad times. The University of Michigan index is not as volatile.  Most economists agree that both surveys mesh together over time and should not be compared to closely in the shorter term.

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