Consumer confidence question.

I'm wondering how this set of events is treated regarding consumer confidence and/or GDP. Does anyone know the answer?
If you have multiple credit cards that have different interest levels on them and you do a balance transfer from the higher interest card to the lower interest card, which counts as a purchase on the lower rate card, but is not actually a purchase in the grand scheme of things because it is only transferring debt from one creditor to another; Does this count in statistics as a purchase? I am wondering this because if it does, it seems to me that credit card companies could artificially manipulate the statistics for the country by offering people balance transfer options. Because given the chance to lower interest, most people would take it, I think. I began to wonder about this, when a credit card provider who has always charged me a high rate recently gave me this option-- particularly since I remember reading that their CEO was a major Bush contributor.
Anyone have any input on this?

[rapier]

1. notes

The Consumer Confidence number is based upon an opinion survey, done by something called the Conference Board.

http://www.consumerresearchcenter.org/consumer_confidence/


It has nothing to do with numbers. It is a poll. While at the margin one or two of those surveyed might report feeling more 'confident' because they are saving a few bucks a month on CC interest your really talking about something else.

Your question about credit card tag is only one tiny part of the entire consumer borrowing mania, and negligible in its impact. The big dog in consumer credit is mortgages and home refinancing. After an enourmous blow off in both of those in the spring mortgage borrowing is slowing and refinancing is plummeting. Low or no interest auto loans come second probably. Then there are all the retail store supplied lines of credit with 'no payments or interest for a year' sort of things. Yes credit card companies are fighting to keep accounts by lowering rates and it does have an impactbut it is only one small part of a credit binge that is stupendous in its scope.

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2. The resoning behind consumer confdence.

When an individual or family faces economic stress in one form or another, they have a natural defense. To conserve spending. A family would cut out luxuries and try to safe as much as possible in preparation for harder times, or in order to deal with the stress.

But when seen done on mass, this savings has a negative effect on the economy. As people are less likely to spend on the movies or fancy clothing. The consumer confidence is meant to measure that tendency in a population, weather they are dealing with economic stress, or weather they feel there incomes are secure enough to not bother with savings and spend freely.

So a high consumer confidence is more than just an opinion poll, but can lead to a self fulfilling prophecy of sorts. Where consumer confidence is high, others might be less likely to see economic stresses that do not exist. Or Store clerks might be less likely to lay off in assuming harder sales. This is a key, and real (theoretically speaking) measure of how the economy is doing, because much of the economy is based on consumer spending.

That said however, there are some clear problems with the consumer confidence surveys. The news recently reports that consumer confidence saw an up swing because of the capture of Saddam Husane. A responsible consumer confidence survey would have tried to removed Saddam from the survey, rather than injecting him into it. This little tidbit of news is completely irrelevant when trying to ascertain how a family or individual is doing. Consumer confidences surveys are now written to poll a targets perception of how the economy is doing over all. Not a survey based on there own particular situation and how likely that are to save for harder times. It’s the difference between asking weather YOU are facing at harder times, or weather you think the Jones's are facing harder times. This being the case, it's quite likely that even the unemployed be returning a positive figure rather than a negative one.

If this is the case, than the consumer confidence numbers you are hearing over the radio and TV, are fictional numbers with no real meaning to them, other than being used as a propaganda tool. The media has been pushing real hard the story line of how well the economy is doing, and how busy the stores is this time of year. This tends to color that perception of how others are doing.