A lot has been written about the plunge in the Conference Board’s “Consumer Confidence Index.” The problem is not with the quantity of the writing about it, but with the quality of the writing about it. Generally speaking, most who mentioned it, did so in a newsreel fashion, presenting the headline number or perhaps a few other sub-numbers like “expectations” in an “if it bleeds, it leads!” fashion, but just about no-DAMN-body did any ANALYSIS of it. What little analysis was presented, was usually worthless. Truly, the majority of the blogosphere is a huge “echo chamber.”

A brief informal survey:

Douglas at 24/7 Wall Street mentioned it and the housing numbers in “A Day Without Sunshine.”

Wall Street Folly presented it with a depressing excerpt from a Bloomers article.

Ditto for the Nattering Naybob, presenting several “bad” news items together.

Be Your Own Economist actually presented the data along with a historical chart – YIPPEE! That’s at least SOME additional value.

Here’s some value-subtracted analysis from The Big Picture:

Does the freefall in consumer sentiment suggest anything in terms of our earlier question: Are we in a recession or not? What might that mean in terms of economic activity in the near future?

Oh, that’s helpful “analysis,” indeed - NOT. Top it off with a chart from Panzner which points down (as all of Mike’s non-inflation charts inevitably do), and you get a real “Bear Picture” indeed.

Calculated Risk weighs in by calling it “impressive Cliff Diving” and snarkily retorting that the recession is “probable.”

Minyanville’s “Two Ways to Play” actually tries to add some value, for which I give them kudos, or the Jewish equivalent, whatever. Buy companies with pricing power and combine the consumer spending dearth with the strong Yen for short opportunities, they say.

On the other hand, Minyanville’s “Five Things” goes back to the newsreel approach, no analysis added.

Here’s the REAL scoop on the “Consumer Confidence Index,” a few tidbits of signal inside of an echo chamber full of noise:

The “Consumer Confidence Index” is a strong reactionary indicator to things that have already happened, that is, when the “Consumer Confidence Index” is plunging, you can be pretty damn sure that something else has already “plunged.”

The “Consumer Confidence Index” has less value as domestic market predictor, but it’s value is contrarian, that is, low numbers are bullish for the domestic stock market.

The “Consumer Confidence Index” has a lot of value as a contrarian indicator for subsequent GDP growth, that is, low numbers generally mean that “Real GDP” will grow substantially from that point forward.

More to follow …

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