CTU economist Bill Rosenberg has pitched into the question of ‘business confidence’ and whether it is really falling.
Writing in his 100th CTU Economic Bulletin, he asks whether business confidence surveys are anything more than opinion polls among some chief executives about what they think of the Government of the day or to get their impressions (“which may not be any more accurate than yours or mine”) of where the economy is going?
Rosenberg acknowledges that business decision-makers need confidence when thinking about investing or hiring new staff, to decide if they can take a punt on whether they can increase sales to justify the additional cost.
But in practice confidence cannot be directly observed and survey results are affected by many things that may be irrelevant to those decisions, he says. Its relevance therefore comes down to whether stronger investment and employment follows higher confidence ratings.
The evidence that it does do this “is at best weak; often it is just not true”. Continue reading “CTU economist shakes the confidence we place in confidence surveys”