Apparently, analysts were shocked when the Conference Board reported earlier today that its measure of consumer confidence, its own bread and butter, in the name, after all, dropped by a rather substantial eleven-plus points in August. And that was on top of a four-point downward revision to July. The new level of 113.8 compares to average expectations for ~124.0. Therefore, no small miss.

The University of Michigan’s index of consumer thoughts and feelings had already plunged right off my chart(s) earlier this month. It seems as if these stat-watchers took UofM as an outlier, particularly since its aggregate responses weren’t nearly as rosy as the Conference Board’s have been since around April.

Either way, suddenly this summer things are going the wrong way. This, of course, is being viewed as a collection of idiosyncrasies – that just so happen to be nearly identical in places all around the world. A term like uniform peculiarities is, certainly, an oxymoron but more and more there’s not as much need for the “oxy” when it comes to assessing macro potential in a less optimistic way (a commonality also shared along the time dimension as well as geography).

China’s PMI’s are riddled with delta COVID, allegedly, as are US consumer confidence numbers. Yet, in between them is (dollar stuff) exports from China into the US which then US consumers buy. Or maybe they buy less; global pandemic and all.

Yet, renewed pandemic overreaction is a far more recent problem. There is the more interesting – meaning relevant – correlation of these feelings, trade from China, and Chinese internal economy with Uncle Sam’s proclivity to dose straight cash.

Being less cryptic about the whole thing, the US economy and consumer spending has cooled off quite substantially and not just from the goods splurge of early-2021. The BEA reported last week that Real PCE has flatlined for months now going back to, you guessed it, April.

Not only that, despite the whopping excesses of domestic goods buying, overall spending including services has actually been quite (deflationary) subdued (below).


While “they” say delta, it’s the lack of additional government helicopters more importantly combined with the lack of additional economic recovery. Yes, payroll reports make it seem like the situation is improving rapidly while the income estimates are far more in-tune with rising consumer ill-confidence therefore flagging Chinese fortunes.

The American federal government managed to boost spending on goods as well as raise the level of sentiment. Temporarily. Transitory, as some might say.

Take away the government stipends, as Real Personal Income excluding Transfer Receipts does, and the overall economy like recent spending patterns looks nothing at all like the Establishment Survey Jay Powell would like to use to justify the Fed’s upcoming taper.

This several-months-old spending pattern, however, looks a lot like China, declining consumer confidence, and even the inflation numbers themselves (above). All of those are simply reverting back to trend – the pre-2020 trend which was not in any way a good one. It is as potentially deflationary as it has been predictable.

To reiterate:

Over in China, the Communists are ready to admit this fact if prohibiting anyone from saying much legitimate about it. Here in the US, taper and all, as well as across the free West, we aren’t even supposed to recognize what’s fact.