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11/2/11 - Economy Watch: Mississippians more optimistic

Mississippians were more optimistic about the future of the economy than the nation as a whole in the third quarter of the year, but key economic indicators in the state were still lackluster.

The latest Mississippi Index of Consumer Sentiment showed only a 0.1-point rise in confidence, taking the MSICS to a value of 76.6. This reading remains short of a value of 90, which, historically, has been considered healthy.

"Mississippians are much more optimistic about the economy than the rest of the nation, and we aren't sure why," said Becky Smith, editor of "Economy Watch."

Based at Mississippi State University, "Economy Watch" is published in cooperation with BankPlus and Entergy. (For more, visit

Smith said economists in the third quarter found a 22 percent drop in consumer confidence nationally. In Mississippi over the last two and a half years, consumers have tended to have more optimism in future conditions than the rest of the nation, she added.

National surveys indicate that a loss of confidence in the federal government is behind the lack of confidence in the economy among many Americans, she said.

Other Economy Watch survey findings include:

--Consumers have upgraded their outlook from "contraction" to "stagnation," meaning consumers do not predict a growing or shrinking economy, but expect it to be flat.

--The position of consumers is fragile. The short-run outlook of the U.S. economy depends heavily on the handling of Europe's current financial crisis because of the interconnectedness of global financial markets.

--Against the backdrop of the weak housing market, the most pressing concerns for consumers include the employment outlook and inflation-adjusted income losses. For three years, consumers have reported very weak income expectations.

--Job and income insecurity are holding down plans to spend.

--Economists do not expect to see the spending the economy needs in order to increase demand and fulfill desired job growth for the foreseeable future.

However, Smith does see a silver lining in the otherwise gloomy data.

"As more of us learn to live within our means, and government does the same, the long-term economic effects will be positive," she observed. "Getting to that point, though, will take discipline, patience and lower expectations, all of which are in short supply the longer unemployment and underemployment rates remain elevated."

Overall, consumers have learned the perils of being too leveraged--that is, holding too much debt. Because this recession stems from a financial crisis, rather than an oil shock or shift in world trade patterns for example, it deals with issues of confidence.

Both businesses and consumers will need to regain confidence in order for the economy to gain momentum, Smith explained.

More than 500 telephone surveys conducted by the MSU Survey Research Laboratory produced the statistically significant results for the third quarter report.

Jim Laird | University Relations and the Office of Research and Economic Development

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