Consumer Confidence (supposedly) At Multi-Year Low
Consumer confidence levels slipped again in June, hitting another nearly three-decade low.
The Reuters/University of Michigan consumer sentiment survey for June saw the overall index move to a reading of 56.4, down from May’s 59.8. June’s reading was a 28-year low. Since 1952, only two surveys have had lower readings.
In April 1980, sentiment was at 52.7, and in May 1980, sentiment was at 51.7, the lowest reading in the survey’s history. June’s reading was significantly below the 85.3 that was recorded last June, and the peak of 96.9 hit in January of 2007.
Economists surveyed by Dow Jones Newswires had been expecting a sentiment reading of 56.5 for all of June. The mid-month reading had come in at 56.7. (source: Dow Jones News Service)
Declining Value of Telephonic Surveys
The Reuters/University of Michigan Consumer Survey of Consumers, like the more famous Nielsen Household surveys will continue to lose value unless they come up with new ways to overcome the barriers imposed by changes in technology.
Telephone surveys are rapidly becoming obsolete, if they have not already achieved irrelevance. To begin with, they depend on the households that maintain a wall or desk telephone line. Each year hundreds of thousands of households disconnect their traditional phone line in favor of the more convenient cell or mobile phone services. Furthermore, surveys must have the participation of a significant cross-section of the population to have any real value to the decision-makers that depend on survey results.
Have You Switched To Only Using Cell-Phones?
Younger people are more likely to take the step to using cell phone service only than seniors however both groups are faced with rising prices and a tighter budget. According to the phone companies themselves, most people in the U.S. carry a portable phone these days. Solicitation via cell phone is a violation of existing telecommunications regulations or local laws. Therefore, traditional telephone-based surveys in this age are more likely to be reaching a very narrow slice of the population they seek to poll. That slice of the overall consumer pie will only get smaller in the future.
The people who pay extra to have unlisted telephone numbers, typically higher average income households, are excluded from most formal surveys. If you can afford to pay for an unlisted phone number you can probably afford to go shopping more frequently.
Are You at Home?
People who work more than one job are far less likely to be sitting near the phone, awake, and willing to talk about how little they have left to spend after the bills are paid.
Who Really Likes Telephone Surveys?
Matters become more complicated when you consider who is likely to continue a telephone conversation once they realize a pollster has interrupted their privacy. The aversion to telephone pollsters is fairly common among the general public. Young and old may decide to participate inequal numbers but I suspect the latter group would be more likely to continue a survey telephone call. A parent at home with three demanding children might take the time to talk to an adult but, again, who knows?
Who Has Discretionary Disposable Income?
When one attempts to question the accuracy of a consumer survey disposable income becomes a key issue. Teenagers are often cited as the largest group with disposable income available for discretionary purchases. The people in that group are more likely to be at their local mall or sitting in a movie theater and available only through text-messaging or cell phone service.
What About the Internet?
Every year more people choose to buy and sell items using the Internet. Are consumer sentiment surveys such as the University of Michigan's properly assessing the impact of transactions conducted over the web? Do pollsters specifically attempt to ferret out the survey participant's activity on the web?
Many trends mentioned in this brief essay are widely known. If organizations that conduct major surveys are adapting to new technologies by including e-mail, text messaging, smartphones, or by placing younger pollsters at mall locations, perhaps their accuracy is not declining. The only thing I know for certain is that the only one person willing to admit they participate in telephone surveys in my social circle was my father. Teenagers I spoke to told me pollsters they see at shopping malls never want to talk with them. 90% of the others who responded to my inquiry no longer maintain a home phone, answer no e-mail surveys, and cannot remember the last time they continued a phone conversation with any unknown caller of any sort. This does not bode well for the accuracy of the Reuters/University of Michigan Survey of Consumers or the economists and investors that depend on thier accuracy.