Are you worried about the Fiscal Cliff? I am! I’m worried that I will have to read another hysterical article about how we are going to go into recession if we don’t reach a deal this week. And I’ll tell you this: I won’t even go into a Starbucks until this is over. I don’t want to see “come together” written on coffee cups. In fact, I’ve decided to boycot Starbucks for the rest of my life. They have a terrible tea selection anyway. But more to the point, the whole “come together” campaign is just a way to push Democrats to yield when they have the upper hand. After all, the Starbucks CEO is part of Fix the Debt.
It appears, as usual, that the only ones who are really worried about the Fiscal Cliff are the elites. Dean Baker reports on the most recent Conference Board Index of consumer confidence. They report two indexes. One is a very reliable measure: current conditions index. This measures how much stuff (seasonally adjusted and all that) people are actually buying. This is way up: 62.8 this month, up from 57.4 last month.
And then there is a kind of black magic measure: future expectations index. It is way down: 66.5 this month, down from 80.9 last month. But this is just an indication that most of the people in the media are screaming about the Fiscal Cliff. Armageddon! Be afraid! Be very afraid!
So when you see news stories that say that consumer confidence is down, you will know it is wrong. The base index is more or less the average of these two numbers. What people are hearing is that the future looks bleak. What people are doing indicates what they think the future is bright. And it is, as long as the politicians and other powerful people don’t screw it up.
Update (27 December 2012 11:16)
Suzy Khimm over at Wonk Blog quotes Starbucks CEO Howard Schultz’s open letter to his employees:
This indicates that Schultz doesn’t even understand what the Fiscal Cliff is. That’s the bizarre thing about all this hysteria: it is mostly by people who are normally hysterical about the budget deficit. This is exactly the opposite. If they really cared about the deficit, they would welcome the Fiscal Cliff. I’ve argued before that what they really care about is killing entitlement programs. That’s why the first step in the Simpson-Bowles proposal was a big tax cut. But it also seems that these people just want to be upset about something. Too much debt? Horror! Too little debt? Horror! Whatever? Horror!