By: Jeffrey Klein
Remember the parlor game where 10 people line up and the first person is given a written message, then told to tell it into the ear of the person next to them, and so on down the line–where the message the 10th person says out loud, bears little resemblance to the original message given to the first person in line?
Well, that is what seems like may have happened due to several “flaws” in the March Conference Board Report on the Consumer Confidence Index, who in this case is the writer of the “original message.”
Here is how it works…
The first “person” in line [are] the financial news services, such as Bloomberg News, who not only report the content directly, but also add their own layer of commentary. If there is a flaw in such an index report, then the flaw may become further “amplified” by the unsuspecting article author, as happened in this case.
The second “person” in line [are] the financial markets, investors and corporate executives, who rely upon such financial news reporting of the data, numbers and comments–for their analyses, client reporting, and planning.
Third in line is the mainstream media, which has been known to also embellish seemingly average news into good news, if it supports their viewpoint, such as the reelection of President Obama.
President Obama, who is fourth in line from the original message, will have his campaign apparatus gloss up, or down, the mainstream media’s reporting, using their own, more “helpful” words–at which point their message may be 180 degrees from the facts of the original message.
Not to worry, if necessary, the mainstream media can then report on President Obama’s speech, and using the same “term-glossing” technique, bring the story to where they need it to be.
An example that immediately comes to mind is the totally invalid monthly unemployment figure.
It is well known to the conservative media that it has been driven artificially low, because it is not accompanied and adjusted by changes in the “labor participation rate;” an equally available and legitimate statistic from the Bureau of Labor Statistics.
If it were, analyst’s estimate the unemployment rate would be over 10 percent–as much as 25 percent higher than it is now.
Here is the primary data and assessment statement released by Lynn Franco, Director of The Conference Board Consumer Research Center (CB):
“Consumer Confidence pulled back slightly in March, after rising sharply in February. The moderate decline was due solely to a less favorable short-term outlook, while consumers’ assessment of current conditions, on the other hand, continued to improve. The Present Situation Index now stands at its highest level in three and a half years (61.1, Sept. 2008), suggesting that despite this month’s dip in confidence, consumers feel the economy is not losing momentum.”
Here is the data:
The Index now stands at 70.2 (1985=100), down from 71.6 in February.
The Present Situation Index, however, increased to 51.0 from 46.4.
The Expectations Index declined to 83.0 from 88.4 in February.
The Consumer Confidence Index is an amalgamation of two sub-indices, which themselves are created from five survey questions, each having a positive, neutral and negative answer option:
1. Respondents’ appraisal of current business conditions.
2. Respondents’ appraisal of current employment conditions.
3. Respondents’ expectations regarding business conditions six months hence.
4. Respondents’ expectations regarding employment conditions six months hence.
5. Respondents’ expectations regarding their total family income six months hence.
There seem to be several points of inaccuracy, validity and conclusion verbiage within the report, and in one case it was summarily picked up by the authors of a Bloomberg News article, who “embellished” the Conference Board Report, arguably in favor of the economic recovery narratives constantly promoted by President Obama and the mainstream media.
The answers to each of the five questions are dissected below:
CB Report Flaw 1:
Q1. “Consumers’ appraisal of current [business] conditions improved in March.”
“Those claiming business conditions are ‘good’ ‘increased’ [to] 14.3 percent from 13.7 percent.”
This is 0.6 positive.
“However, those claiming business conditions are ‘bad’ also ‘increased’ to 32.7 percent from 31.7 percent.”
This is (1.0) negative.
The net change is (0.4) negative.
The CB Report’s conclusion statement … “conditions improved in March,” is false, as it is in conflict with the data.
CB Report Flaw 2:
Q2. Statement A: “The Present Situation Index, however, increased to 51.0 from 46.4.”
Statement B: “The Present Situation Index now stands at its highest level in three and a half years (61.1, Sept. 2008), suggesting that despite this month’s dip in confidence, consumers feel the economy is not losing momentum.”
Statement A’s figure of 51.0 is 10.1 points lower than that referenced in Statement B … “(61.1, Sept. 2008)”–a 19.2 percent negative variance.
This flaw is further amplified by the author’s ‘observation comment’ … “now stands at its’ highest level in three and a half years.”
And, then amplified a second time by the author’s ‘conclusion comment,’ … “suggesting that despite this month’s dip in confidence–consumers feel the economy is not losing momentum.”
The CB Report’s definition and conclusion statements are false, and unfairly supports President Obama’s economic recovery narrative.
Bloomberg News amplification and distortion of Flaw 2:
An article in Bloomberg News yesterday in the section quoted below, amplified the pro-Obama narrative–started by the CB report further:
“The Conference Board’s gauge of present conditions increased to 51 in March, the highest since September 2008, from 46.4 a month earlier. The share of respondents who said this month that jobs were plentiful climbed to 9.4 percent, also the highest since September 2008, from 7 percent.”
…”highest since September 2008…” conspicuously left out “61.1″ figure.
… “The share of respondents who said this month that jobs were plentiful climbed to 9.4 percent, … from 7 percent.”
The Bloomberg author clearly omitted Ms. Franco’s statement from the CB report, which was neutral on the point … “Consumers’ assessment of the job market was mixed.”
Plus, the Bloomberg author also clearly omitted the accompanying “jobs are hard to get” negative half of the question from the CB Report:
Bloomberg included: “Those saying jobs are ‘plentiful’ “increased’ to 9.4 percent from 7.0 percent,” …
This is 2.4 positive.
Bloomberg omitted: “…while those stating jobs are ‘hard to get’ also rose, to 41.0 percent from 38.6 percent,”
This is (2.4) negative.
Therefore, the actual net result of the question is 0 change, or “Mixed,” as stated in the CB Report.
The Bloomberg News “reporters” omission was obviously amplifying their report to further favor President Barack Obama’s economic recovery narrative–in direct conflict with the facts.
CB Report Flaw 3:
Q3. “The proportion of consumers expecting business conditions to ‘improve’ over the next six months ‘increased’ to 19.2 percent from 18.9 percent.”
This is 0.3 positive.
“However, those anticipating business conditions will ‘worsen’ also ‘rose’, to 13.5 percent from 11.8 percent.”
This is (1.7) negative.
The net change is (1.4) Negative.
The omission of a conclusion comment is inconsistent, and as it would have had to be ‘negative;’ this unfairly favors President Obama’s narrative of economic recovery.
CB Report Flaw 4:
Q4. “Consumers’ outlook for the labor market was moderately less upbeat.”
“Those anticipating ‘more’ jobs in the months ahead ‘decreased’ to 17.3 percent from 18.8 percent,” …
This is (1.5) negative.
“…while those anticipating fewer jobs increased to 18.3 percent from 16.4 percent.”
This is (1.9) negative.
The net change is (3.4) negative.
As the negative variance, i.e. (3.4), represents 19.2 percent of the average value of the four data points, for the CB Report to use the phrase “moderately less upbeat” is truly far less than accurate, and clearly is intended to support President Obama’s economic recovery narrative.
CB Report Flaw 5:
Q5. “The proportion of consumers expecting an ‘increase’ in their incomes ‘improved slightly‘ to 15.8 percent from 15.5 percent.”
This is 0.3 positive.
The net change is inconclusive–due to the omission of the ‘negative’ question.
The omission of the corresponding [negative] question: e.g. … ‘The proportion of consumers expecting a ‘decrease’ in their incomes,’ renders the CB Report’s conclusion statement … “improved slightly,” … to be invalid.
However, it does show that the CB Report was, once again, by omission, and thereafter, by amplification, unfairly favoring President Obama’s economic recovery narrative.
As a result of omissions and commissions, in each and every one of the five survey questions, which skewed toward the support of President Obama’s economic recovery narrative, the Conference Board’s March Consumer Confidence Report, and any non-negative conclusions are suspect.
And, without going further than Bloomberg this time, it seems clear how this parlor game can work in vertical terms–where the lack of integrity at each level may be limited, but the accumulated vertical change is tremendous.
As such, it renders any pro-Obama Administration mainstream media news short on validity.
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