Economists care about feelings a little bit from marketplace. I'm Sabrie Benashore in for David Brancaccio.

Every month the University of Michigan asks consumers how they are feeling about the economy, their personal finances, about

inflation. We'll get the results so far for January a little later this morning.

Eric Gordon, professor at the University of Michigan's Ross School of Business, is

here to talk about feelings and more.

Good morning.

So last month we saw this big turnaround and how consumers felt about the economy and since

then we have seen the declines in inflation actually slowed down a bit. What is the

most important thing that drives how we consumers feel? The most important thing is our sense of how we're doing relative to

inflation. So our income's going up faster than inflation is going up. Even in

that good news December reading that you talked about

only 55% of people said that they expect their incomes to rise at least as fast as

prices. Just barely over half think that they're going to keep up with

inflation. Are we good at predicting inflation? We are bad at predicting

inflation and we're even bad at measuring the inflation we are already experiencing.

When you look at the government's CPI numbers, you see one thing, when you look at consumer sentiment numbers we think

inflation is terrible I just wonder if how consumers feel about the

economy or how we say we feel about the economy actually translate to what we do and what we spend and how we behave.

We've known for a long time that the link between how we report we feel and then what we actually do about it is pretty tenuous.

There's some link but don't count on it.

You know, we're about as rational as rabbits.

The Ross School at the University of Michigan and the F.T. Financial Times are conducting monthly

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