Not Black Mouth To Bad Mouth The Global Causes Of Transitory Inflation

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.

The University of Michigan’s index of consumer thoughts and feelings had already plunged right off my chart 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 in 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.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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