Does Consumer Optimism Help Shape the Economy?

What if we’re not just predicting the economy, but helping create it?

I’ve been thinking about that since the midterms. For about a week afterward, we saw a noticeable jump in inquiries about the Las Vegas rentals we manage. It could have been a fluke. But it made me wonder whether some people who had been sitting on the sidelines felt a little more comfortable picking up the phone or scheduling a showing.

What optimism looks like from my desk

The University of Michigan’s consumer sentiment survey asks people about their finances, business conditions, and whether it’s a good time to buy. The Conference Board’s consumer confidence survey also asks people what they expect for jobs, income, and business conditions. University of Michigan survey overview · The Conference Board survey overview

The part I keep coming back to is what happens between “I think things might get better” and “Let’s go look at that place this weekend.” That’s the part I have a chance to see in my work. On the rental side, it might start with more inquiries and showings. On the sales side, it might be a buyer who’s been watching listings for months finally calling to see one.

There are plenty of reasons inquiries can jump in a week. We might have had more homes available, or a particular listing might have drawn more attention. I’d be more interested if the calls kept coming over several weeks and started turning into more showings, applications, or offers.

Can the way we feel change what happens next?

Think about how you make a big decision. If you’re worried about your job or where prices are headed, you might wait a few months before moving, even if you can afford it today. If you feel better about what’s ahead, you might decide it’s time to start looking.

Now imagine a lot of people making those decisions around the same time. That’s where I think optimism can have an effect on the economy. How we feel about the future can change what we do today, and all those individual decisions can add up.

I’d like to hear what you think. Have you ever put off a big decision because you felt uncertain about the economy? What made you feel ready to move forward?

— Walt Ford