Consumer Perceptions Of The Economy

New Gallup Poll economic data collected in early October continue to show more consumers giving the economy "poor" ratings than giving it "good" or "excellent" ratings combined. In addition, just as many consumers tell Gallup that economic conditions in the country are "getting worse" as say they are "getting better."
...
Traditional economic analysis suggests that when consumer optimism is relatively weak, as it is today, consumers are likely to hold back on their spending. In turn, this tends to further slow the economy until economic conditions and consumer perceptions improve.

Gallup attitudinal economic data, however, suggest that this is no longer the case. Whether it is the result of stock-market and home-equity wealth effects or some other reason, there appears to be a growing disconnect between consumers' perceptions of how well the economy is performing and their willingness to spend. Of course, the big question for the future of the economy is whether this disconnect in traditional consumer behavior can be maintained for an extended period -- at least until the job market starts to show significant improvement.