The Power of Collective Positive Thinking

Regarding the economy, it’s something of a self-fulfilling prophesy: if enough people think it’s getting better, they will behave as if it’s getting better, and then it WILL get better. So this means a lot:

Consumer confidence rose in January to its best level since November of 2000, amid an improving view of both current and future circumstances, according to a report released Friday.

The University of Michigan’s consumer sentiment index moved to 103.8 at the end of January, compared with December’s reading of 92.6, according to those who had seen the subscriber-only report. The final January level also compares favorably with the preliminary 103.2 reading that was reported at mid-month.

….Consumer confidence gauges have improved over recent months, amid a surprising amount of volatility, particularly in the Michigan data. Their gains have followed the broader improvement in the U.S. economy over recent months, a recovery that economists and policy makers broadly expect will define the current year as well.

….The January Michigan data is “constructive” for the economy, said Carey Leahy, economist with Deutsche Bank in New York. “Anything above 90 is good, anything above 100 is great,” Leahy said, adding he sees the data imparting some lift to consumer spending at the beginning of the year.

Earlier this week, the New York-based Conference Board reported in its monthly poll of consumer confidence that consumers’ views of the economy rose to their best showing since July 2002, even as those same households had a somewhat tentative estimate of the state of the labor market. [AP]

In economics, the power of collective positive thinking is an objective reality.