Dr Boyce Money: Why Consumer Confidence Actually Matters

Beyonce has a song about how she loves men with "big egos." This might imply that she likes men with confidence. Confidence matters a great deal in terms of male/female attraction, but believe it or not, it actually impacts our economy. Every month, the University of Michigan measures consumer confidence, to determine if Americans are willing to spend money and how they feel about their current and future economic security.

But you might ask, "Why would I care about confidence, since it's only psychological and imaginary?" Good question. Actually, confidence is a psychological phenomenon which leads to very real impacts on our choices and behavior. A confident man who asks out every girl he meets will probably have more mating opportunities than a good looking guy who doesn't open his mouth. A confident consumer is someone who feels good about his/her economic situation and therefore decides to spend money, which is always good for the economy. Confident companies make investments and hire new employees, but insecure companies put projects on hold and don't hire anyone. Confident banks make loans, but nervous banks hold onto their capital, thus slowing down economic growth for the nation.

Shortly before the signing of his stimulus bill, President Obama made a terrible mistake in trying to get the bill passed.

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Bartering's Big Comeback

Is Bartering Right for You?

Bartering, the trading of goods and services with no cash changing hands, is making a big comeback in this struggling economy. Craigslist.org has seen a 100% increase in activity on its bartering boards over the last year. Bartering can be fun and profitable because both sides of the "trade" are getting what they want, again for NO cash! So how does it work and is it right for you? Continue clicking through our gallery to find out.

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Barterings Big Comeback

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Bartering is as simple as trading a skill or item you have for something you want.

For example, if you are a painter, you offer a carpenter a bedroom paint job in exchange for him fixing your porch steps. Or you offer to design a website for a local restaurant in exchange for a few dinners there with your spouse. Or trade your legal services for a new computer ... and on and on.

Best yet, ANYONE can barter ... you don't need to own a business or have a specialized skill.

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Don't believe you have anything to barter with? Think again.

Do you have items around the house that are in good condition but you no longer want or need (here's a great way to get rid of unwanted gifts)? Do your friends ever compliment you on something you do -- like your ability to bake, to plan perfect parties or your green thumb? Do you have any hobbies that you can teach someone else?

If you answered yes to any of these questions, you have something to barter with! If you can babysit, mow lawns, bake, pull weeds, run errands, knit, etc. you have something other people want.

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It's estimated that 60% of the companies listed on the New York Stock Exchange participate in some kind of bartering

Bartering is gaining popularity with small businesses, too. If you have a skill or a product that people are paying for everyday, why not consider exchanging that skill for things that you need, rather than cash?

Bartering can also be a great way in tough times to get your name out there and meet new clients.

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So, how do you get started?

Well, there are several ways to barter. Start by reaching out to people you know. Contact friends, neighbors, colleagues, local businesses you use and so on. Tell them what you have to offer and ask if they are interested in bartering.

There are also local bartering clubs popping up all over that bring people together to swap. Check your newspaper, community centers, postings at school or the grocery store.

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For a broader reach, try an online bartering site.

Dozens of sites have sprung up to help make bartering matches. It's easy! On such sites as Craigslist.com, BarterBucks.com, BarterBee.com, HomeExchange.com, U-exchange.com, swapstyle.com, swapthing.com and many others -- you merely list what you have available to barter.

Most of the exchanges are made online ... although there is even a bricks and mortar store in New York City, called The Free Store that facilitates bartering transactions.

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Join a barter "bank."

On some barter sites, you swap your item or service directly with another person. Others act more like a network. Every item or service you offer to another member earns you a point or credit value.

You can then use those points to buy items and services from any other member in the network. So if Joe needs the tennis lessons you are offering, but doesn't have anything you want in exchange, that's OK. You can use the points you earn from teaching Joe tennis to "buy" some Web site design from Sue.

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One word of caution...

Only do business with established barter Web sites that are highly rated by its users and keep your personal information private and secure.

Plus, one note courtesy of Uncle Sam ... The IRS requires people/companies who barter to report the fair market value of the goods and services received in exchange for goods and services provided.

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To really show you the power of bartering, let us share a quick story.

In 2005, a young man from Montreal named Kyle MacDonald decided to use the power of the internet to try his hand at bartering. Kyle started with a paper clip and decided he was going to try to trade up to a house -- no, we're not kidding! And guess what ... he did it! After trading a paper clip for a pen, he went through everything from a gas stove to a snowmobile to a recording contract ... and on and on until he ended up with a nice three bedroom, two bath house. Last we heard, MacDonald was back in bartering mode, trying to trade his house. We can't wait to see what he trades for this time!

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To get the American people to sign onto his stimulus package, Obama made the politically intelligent move to lower expectations and actually get the American people to understand that we are in tough economic times. He also used common fear tactics to get Americans behind his new bill, which eventually passed. The problem, however, is that by resorting to fear tactics, the president reduced consumer confidence, making his job that much more difficult. When consumer confidence dropped, the ability of the stimulus package to actually improve the economy became that much lower. So, the president then had to spend several months cheering up the American people.

In this video(which you can click here to watch), I break down consumer confidence and how it impacts our economy. Enjoy!

Dr Boyce Watkins is a Finance Professor at Syracuse University. He does regular commentary in national media, including CNN, MSNBC, BET and more.. To have Dr. Boyce commentary delivered directly to your email, please click here.