One of the driving forces of populism is this very keen sense of dissonance. We are told one thing only to observe another, with the basis for that first thing being little more than the credentials of the person making the claim. If Janet Yellen proclaims consumer spending as “solid”, we are supposed to take her at her word without question. The whole system is predicated on a logical fallacy.

The word itself, “solid”, is meant to be subjective particularly in this context. It is not an official measure and therefore itself a direct conclusion drawn from evidence. The weight of it is nothing more than Yellen’s title as Fed Chair. That is always a problem, but has been more so over the last ten years.

Twice a year every year, the Chairman of the Federal Reserve drives up to Capitol Hill and formally reports to Congress. Given our current circumstances, these ceremonial affairs are lent a great deal of mainstream scrutiny as the public tries to parse the smallest scraps of unanticipated deviations from the carefully laid script. In many ways, this is a rerun of the late 1990’s dot-com bubble, but in reverse. When Alan Greenspan would testify, even his briefcase would be subjected not to so much scrutiny but reverence for what the Fed would not have to do, as the St. Louis Fed embarrassingly confirms. When Janet Yellen testifies, the world waits with bated breath for her to endorse instead the smallest little something that the Fed might have got right.

In her Humphrey Hawkins testimony to Congress in February 2017, Yellen declared:

Consumer spending has continued to rise at a healthy pace, supported by steady income gains, increases in the value of households’ financial assets and homes, favorable levels of consumer sentiment, and low interest rates.

“Healthy” is, of course, a synonym for “solid.” This decree about US consumers is one that she has made before, many, many times, including in June last year:

With continuing gains in disposable income and wealth, I expect consumer spending to grow at a solid rate…

The U.S. economy has performed better than many others around the globe, and that performance has relied chiefly on the resilience of domestic sources of demand, consumer spending in particular.

I could go on and on backward through time, and at each juncture consumers are always “solid”, “healthy”, or whatever non-specific adjective might be employed to convey the same message no matter what. And that is largely the point, as consumers, contrary to the meaning of her statements, have been the opposite. Since we are not dealing with scientific principles but rather politics, what she says can be taken as true if for no other reason than the plus sign in front of almost every consumer account. If it isn’t contracting, it must be “solid.”

In terms of real consumer spending, however, even the positive numbers haven’t been so consistent. Going back to, unsurprisingly, July 2015, Real PCE has first been guided to a lower trajectory than the one that existed before the middle of 2014 (“rising dollar”) while also being skewed toward a few too many negative months – especially those in Q1 2017.

Therefore, attempting to take credit for this (not as bad as other places around the world, consumer wealth, low interest rates, etc.) demonstrates just how badly the US economy has performed especially in the past few years. Claiming that at least we aren’t Brazil is a conspicuously low standard, one that can be squeezed into “solid” only by taking Yellen for an expert.

The rest of the latest data on the state of consumers follows in the same manner. There is no momentum in spending because there is none in income. As bad as things were to start last year, they really aren’t any better at the start of this year. What Yellen claims as “healthy” is in every legitimate context weak. Her credentials add no weight to the discussion when using actual data rather than ambiguous weasel words.

The genesis of the idea is as always the unemployment rate. Here, however, economists have it all backward as usual. They use it as a basis for transforming what is clearly weak into “solid”; like rose colored glasses, at 4.5% the unemployment rate makes everything appear to look rosy. Instead, the fact that nothing has changed from consistently pathetic disqualifies the unemployment rate, particularly given what we find for incomes and wages. The economy stays the same no matter what that ratio calculates.

Economists have been talking up the state of consumers even more so for the last six months no matter what we find in these figures, expecting that economic channel to lead to meaningful improvement; and then Q1 GDP tanks as usual. Having run out of “residual seasonality”, snow storms, and Polar temperatures, all that is left is this constantly inappropriate use of terms. Weakness in Q1 was primarily caused by weak consumer spending, as clearly shown on the first chart in this presentation. Weak spending is a product of continuously weak income, directly challenging and demolishing the concept of “full employment.”

I have written it before but it is almost as if Yellen and other officials wield these words as if they were the intended stimulus all along. Bank reserves aren’t really money, and monetary policy itself is predicated almost exclusively on sentiment and manipulating so-called rational expectations – the perfect arena where credentials could be, in theory, legitimate currency. If they keep saying “solid” long enough, I really think they believe a solid economy will result, this economy that “should be.”

It would have been a dubious proposition even in 1999 at the height of this irrational technocratic worship. Maybe Yellen doesn’t realize that since 2011 almost all markets are now consistently aligned against her position. They have, unlike the media, become aware of the constant disappointment of this always “healthy” consumer environment.