Any indicator becomes a more useful tool when you understand the factors that affect it. Such knowledge can aid in both interpreting and anticipating the indicator’s readings. Measures of consumer attitude, however, differ from other indicators because the former deal not with something tangible—such as the number of computers produced, the level of aircraft orders, or the value of construction put in place—but with psychology. Using consumer sentiment measures effectively thus requires knowing how consumers’ emotions are brought into play and whether these emotions are sufficiently strong to change spending habits and thus have an impact on the general economy.

In the United States, employment status has deep psychological resonance. You are what you do. When people meet at a cocktail party or at a bar, their first question after exchanging names is usually, “Where do you work?” Not having a proper response can be upsetting.