Americans say the economy is bad but keep spending. Don’t mistake the midterm polls for a forecast

Consumer confidence is at its lowest level since 2014, yet spending rose in August. Kari Butcher, Burson's Chair for Intelligence & Insights for the Americas, argues that business leaders make the same mistake with election polls: treating what people say as a prediction of what they will do.

Business leaders are making consequential decisions based on a category error: treating what people say in a poll as a reliable forecast of what they will do next.

Consumer confidence falls, and a retailer cuts inventory. A majority supports a social issue, and a CEO assumes speaking out will strengthen customer loyalty. A company's reputation score holds steady, and its leadership team concludes customers aren't going anywhere. In every case, the poll may be accurate. The business conclusion can still be wrong.

Polls measure what people say at a particular moment. On their own, they cannot tell a leader how that sentiment will translate into purchases, loyalty, employee behavior or investor reaction. Get that distinction wrong, and a company can pull back while demand remains strong, enter a debate its customers did not ask it to join, or mistake the friction of switching for genuine loyalty.

The midterms make this harder. The economy is voters' top issue: 84% of registered voters told Pew it is very important to their vote. Polls are everywhere, and leaders want to know what the election will mean for spending, investment, and what customers and employees expect. A poll showing who's ahead may help a business anticipate the political environment. It cannot tell them how consumers, employees or investors will respond to it. CNN's average of recent generic-ballot polls has Democrats ahead 52% to 42%, but that is a measure of preference, not of what any customer will do next.

As a former pollster, I don't think polling is broken. The question I'd ask of any poll is what decision it gives me enough evidence to make. That means knowing whose views the number captures, what's behind them, and whether people will act on them.

Take the economy. The Conference Board's consumer confidence index fell 6.7 points in September to 81.9, its lowest level since 2014. The next day, the government reported that spending rose 0.9% in August while personal income rose 0.2%. Households made up the difference by saving less: the saving rate fell to 4.1%. Sentiment says people are deeply pessimistic. Spending says they're carrying on. Both are partly true, because people can feel one way and spend another. A retailer watching only the sentiment number would miss that.