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September consumer sentiment inches up

A pedestrian carries a shopping bag as he walks through the Union Square shopping district in San Francisco, Calif.

Kai Ryssdal: Especially glad you could be with us today, because really, it's all about you: The humble American consumer.

I'm not just saying that, either. We learned today consumer sentiment is up just a touch from where it was in August. With all the pressure on consumers to help lead the economic recovery, even a slight gain is nice to see.

What's not entirely clear, though, is how useful all those things that try to measure subjective sentiment really are. From New York, Marketplace's Stacey Vanek Smith reports.


Stacey Vanek Smith: Consumer Sentiment Data, The Consumer Confidence Index, The Consumer Comfort Index -- all of these are supposed to help economists figure out how people like you and me are, well, feeling about the economy.

So how exactly do you go about measuring feelings? Lynn Franco is an economist with the Conference Board, which issues a report on consumer confidence every month. She says to measure confidence, they ask 3,000 random people five questions.

Lynn Franco: What we ask them is to rate current business conditions, current employment conditions and then we ask them their expectations six months out regarding business conditions, employment and income prospects.

All the surveys are similar, but can a handful of multiple-choice questions really predict the future? Chris Christopher says yes. He's a senior economist at IHS Global Insight. He says the proof is that fuzzy feelings lead to pretty concrete actions.

Chris Christopher: Consumer sentiment fell over the summer months by 25 percent. Restaurant spending, clothing store spending and department store spending were very, very weak in August.

Christopher says consumer spending makes up about 70 percent of the U.S. economy. For people to start feeling better and spending again, companies have to start hiring again. Of course for companies to start hiring, they have to feel like consumers will start spending again.

Oh feelings -- they're so messy.

In New York, I'm Stacey Vanek Smith for Marketplace.

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.

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