Are we making ‘bad’ worse?

“That’s really incredible,” a CNBC anchor said this morning, seconds after the Conference Board reported that consumer confidence dropped to its lowest level since April 2009.

Incredible? Not really. People are influenced by reality and also the perception of reality. They may have the same income they had last month. They may have the same jobs. They may have even been able to sock away a few dollars. But if you keep up a steady drumbeat of, “things are getting worse and we may be heading for another perception,” how reasonable is it to expect people not to lose confidence?

Clearly, fear is not the only thing we have to fear. But fear plays a big part in increasing worry. And worry is what makes people stop spending and people not spending is what creates recessions and recessions are what gives people more fear, which increases worry, which makes people….. well, you get the picture, right?

“A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade. Consumers’ assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.

Those expecting business conditions to improve over the next six months decreased to 11.8 percent from 17.9 percent, while those expecting business conditions to worsen surged to 24.6 percent from 16.1 percent, the Conference Board said. Those anticipating more jobs in the months ahead decreased to 11.4 percent from 16.9 percent, while those expecting fewer jobs increased to 31.5 percent from 22.2 percent. The proportion of consumers anticipating an increase in their incomes declined to 14.3 percent from 15.9 percent.

But the people surveyed aren’t economists. It’s regular consumers. And what those consumers think about the future makes up 60 percent of the survey results.Their view of the jobs outlook depends on what the people they listen to say is the outlook on jobs.

Sometimes those are the TV and radio business reporters. Sometimes it’s the presidential and congressional candidates who point out how horrible things are and how worse they’re going to get if you don’t elect them a year from now.

More often than not, we think what we’re told we should think. So the emotional component of a country’s economy certainly presents a problem for politicians and reporters — how to portray reality without contributing to a worse reality.

So far, few have mastered it.

American Public Media’s Marketplace is taking a stab at it with it’s new “Index,” which purports to quantify the state of things on a daily basis via point system. It’s unclear — at least to me — whether that’s a step in the right direction of balanced economic assessment, or a step toward making the emotional component of the economy even worse.

What do you think?