Rising consumer confidence

As N.C. State University economist Mike Walden says, the major keys to the economy are jobs, household income and spending. His wife, Mary, who studied psychology at college, asks how people’s feelings about the economy play in their economic decisions.

Dr. Walden responds: “I think they play a big role, and I think this is a role that economists are increasingly emphasizing. Of course, one measure we do have — we call it the consumer confidence index — and it comes out every month and does indicate overall a general feeling of households about the economy.

“Now this index took a big, big drop during the recession: It fell by about 50 percent. Now in the last four years, it has come back, but it’s only back about halfway. And we do think that consumer confidence, or feelings about the economy, affects what people do, particularly in spending, particularly on big-ticket items like buying cars and homes and appliances and investing. All those, I think, are very importantly impacted by consumer.

“So the fact that we have seen an upswing in consumer confidence in recent years, I think, is a very, very good sign for the economy.”