We like to think, at least we who are connected with the subject, that economics is a science. As with chemistry, if you mix this goop with that other goop over there in the right quantities then you'll end up with the same final substance. Sadly, it doesn't really work out that way--the most important and commonest answer to any economic question is "It Depends." Mixing this interest rate with that amount of infrastructure spending does not always lead to the same leap out of recession. Lowering this tax rate right here could increase tax revenue, lower it or leave it the same at different times. Our problem is that we're trying to work out what it is that human beings do. Humans being an 'ornery lot they, we, don't do the same thing all the time. And a useful way of talking about this is to talk of consumer confidence. The better that is then the better the economy is going to do, whatever else we might be doing with other things. The worse the worse.

So, the news that consumer confidence is up is good news:

WASHINGTON (AP) — U.S. consumer confidence in September rose to the highest level in nine years, a hopeful sign that economic growth will accelerate in coming months. The Conference Board said Tuesday that its consumer confidence index rose to 104.1, up from 101.8 in August. It was the strongest reading since the index stood at 105.6 in August 2007, four months before the beginning of the Great Recession of 2007-2009.

Well, we could say that at least half the time economists are clueless as to what is going to happen. So, the people in the street are confident? Why should we think they're any better informed? But that's just not how it works. It could even be that all those confident and cheerful people are entirely deluded. But the economy is still going to do well:

“Consumers’ assessment of present-day conditions improved, primarily the result of a more positive view of the labor market,” said Lynn Franco, the Conference Board’s director of economic indicators. “Looking ahead, consumers are more upbeat about the short-term employment outlook, but somewhat neutral about business conditions and income prospects.”

This doesn't mean that the immediate future of the economy is going to be perfect but it does mean that it's going to be good. Simply because, given that we're dealing with human beings here, we've not got a pure and 100% science subject on our plates:

Consumers were more upbeat about employment conditions. The nation’s unemployment rate has fallen below 5% and millions of people have found jobs in the past several years. Companies have also had to raise wages amid what they call a shortage of skilled labor.

Keynes talked about this in a slightly different manner--he referred to animal spirits and he was talking about businessmen, or as we might now call it producer confidence rather than consumer.

We're those 'ornery humans and we're driven, at least in part, by emotion. Whether to have that extra ice cream, go out and actually buy that new car we've been thinking about, taking the leap into taking that new job that's rather better but maybe we'll not be as good at it as we think? We can all think of times when decisions like this would be "Heck Yeah!" and other times when the desire is just to hunker down and not take the slightest risk about anything at all. And this is what we're really talking about when we talk of consumer confidence. Similarly, that producer confidence, those animal spirits, is when the businessmen are thinking, yep, let's build that new thang! instead of having yet another meeting to talk about why they're not going to just yet.

It seems odd to think that something as large as that American economy, all $18 trillion of it, being driven by something as trivial as whether people feel good this month or not. And of course it isn't driven by that in total. But all economics happens at the margin. And more confident people will save a little less, spend a little more, take a little more risk and just in general take part in more economic activity. So, if everyone does just a little bit more economic activity then there will be more economic activity. And more economic activity is the definition of economic growth. Thus, people wandering down the street and in general thinking "Hey, Yeah, I Feel Good!" means that the economy does in fact grow. And, weirdly, thus they should be feeling good because the economy is going to grow.

Keynes' point was that when those animal spirits among businessmen fall low then there will be a recession for the reverse reason.

It's all really most odd but it's also true. Higher consumer confidence will lead to more economic growth. Thus people feeling cheerful leads to the reason for them to be cheerful, we're all about to get that little bit richer. Yes, I'd prefer it if it were all a bit more scientific too but we do have to remember something oft said where Grandpa hailed from, "There's nowt so queer as folks." Then again the same place gives us "Many a muckle makes a mackle" so don't think they were all imbued with timeless wisdom. It just is true that, at the margin, the economy depends upon confidence and the higher it is the better the immediate future is going to be.