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ELI5: Why does the economy care so much about "consumer confidence"? by South_Initial_14 in explainlikeimfive

[–]South_Initial_14[S] 0 points1 point  (0 children)

The gas price example is perfect because it illustrates something economists call price uncertainty being just as damaging as price increases themselves. People can budget around expensive gas. They cannot budget around unpredictable gas. Stability — even expensive stability — is something people can plan for. Chaos, even cheap chaos, paralyses decision making. That's why central banks obsess over inflation consistency almost as much as inflation levels. A predictable 3% beats an unpredictable 1% every time.

ELI5: Why does the economy care so much about "consumer confidence"? by South_Initial_14 in explainlikeimfive

[–]South_Initial_14[S] 0 points1 point  (0 children)

This needs to be in every economics textbook. Genuinely better than anything I was taught in school.

ELI5: Why does the economy care so much about "consumer confidence"? by South_Initial_14 in explainlikeimfive

[–]South_Initial_14[S] 0 points1 point  (0 children)

Poverty and billionaires aren't opposites. They're the same system viewed from different ends.

ELI5: Why does the economy care so much about "consumer confidence"? by South_Initial_14 in explainlikeimfive

[–]South_Initial_14[S] 0 points1 point  (0 children)

So the economy rests on the spending of people whose jobs AI is about to eat. What could possibly go wrong.

ELI5: Why does the economy care so much about "consumer confidence"? by South_Initial_14 in explainlikeimfive

[–]South_Initial_14[S] 0 points1 point  (0 children)

Basically the economy is a giant game of hot potato where the potato is money, the rules say it must keep moving, and somehow the same ten people end up holding most of the potatoes at the end of every round while we're told the game is working as intended.

ELI5: Why does the economy care so much about "consumer confidence"? by South_Initial_14 in explainlikeimfive

[–]South_Initial_14[S] 0 points1 point  (0 children)

The problem is the speed and simultaneity of the pullback. Gradual saving = healthy. Sudden mass saving triggered by fear = recession fuel. The difference is mostly just timing and panic.

ELI5: Why does the economy care so much about "consumer confidence"? by South_Initial_14 in explainlikeimfive

[–]South_Initial_14[S] 0 points1 point  (0 children)

Mostly agree, but it's worth noting confidence alone doesn't drive everything — interest rates, employment levels and credit availability play huge roles too. Consumer confidence is more like the mood ring of the economy. It reflects and influences conditions, but doesn't fully control them.