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The could-be-worse economy

David Brancaccio Nov 29, 2011

Now some proof that American consumers are feeling a lot more optimistic about the state of our economy. The monthly consumer confidence number came out today and it was up — way up — from last month. On a scale of 100, the November number was 56, compared with October’s 41. That’s the biggest one-month jump since 2003, and higher than many analysts had been predicting.

Karen Dynan is an economist at the Brookings Institution. She says the numbers are indeed telling us people are feeling a little less gloomy about the economy. And it’s a different picture than a just few months ago when there was a lot of talk about heading into a double-dip recession. Now, with some solid retail sales, lower gas prices, decent auto sales and employment rates ticking up, there’s reason to hope that businesses will feel more confident and start hiring again. And when people are optimistic about jobs, they feel more confident about their future.

Still, just in case the picture is starting to look a little too rosy, Dynan says the current consumer confidence rate is low, historically speaking. When the economy is growing at a normal rate, confidence is around 90. Consumers have been saving more and getting out of debt (pdf). While that’s great for them, it’s not so good for an economy driven largely by consumer spending. And if people are dipping into their savings to spend at the mall, it raises questions about how long this level of spending can go on.

The key to keeping consumer confidence high is jobs, jobs, jobs. We’ll get the latest monthly unemployment numbers this Friday.

Also on the show today, sales of e-readers have increased dramatically over the past year. Sale of Amazon’s Kindle reader quadrupled last Friday compared to the day after Thanksgiving the year before. Electronic books have become 20 percent of the market for the written word.

Even authors are getting into the spirit: 91-year-old Ray Bradbury, that stalwart defender of the printed page, has given the blessing for publisher Simon & Schuster to release an e-book version of his “Fahrenheit 451.” Among the book’s themes, if you recall, is how electronic media might push people away from reading books.

Not so much the case in real life, and that quickens the Marketplace Daily Pulse today.

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