Measuring Consumer Confidence

We are inundated with media, pundits, and bloggers telling America what its opinion should be.

We are similarly flooded with pollsters — who seem to get Presidential elections and politics in general abysmally wrong — telling us what we think.

There are three long term, reliable measures of consumer/business confidence upon which I have historically relied to provide an accurate picture of the state of affairs in the country:

The University of Michigan Consumer Sentiment Index

The Conference Board Consumer Confidence Index

The NFIB Small Business Optimism Index

I particularly like to be able to see the trend as I am a firm believer that the trend is your friend. It shows you things that a discrete number cannot.

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The Black Magic Of Congressional Arithmetic

When one reads anything these days one is confronted by headline grabbing numbers as to the “cost” of various pieces of legislation — right now this falls under the headings of “infrastructure” and “social infrastructure.”

There are two bills at play now in the US Congress.

 1. Bill No 1 — the Infrastructure Investment and Jobs Act (10 Aug 2021), priced at $1,200,000,000,000.

 2. Bill No 2 — the “social infrastructure” bill, known as the Build Back Better Bill informally, is intended to be passed by reconciliation, a legislative trick that requires a simple majority in both the House and Senate. This bill is priced at $3,500,000,000,000.

These two bills are in addition to the American Recovery Plan Act already enacted by POTUS Biden and the US Congress (the Dems) for $1,900,000,000,000.

We are talking nominal spending of more than $6,600,000,000,000 — which I believe understates the total expenditures by more than $3-4,000,000,000,000 because of Congressional Black Magic Arithmetic.

That is a total of approximately $10,000,000,000,000 which will ultimately add about $7,000,000,000,000 to the National Debt.

Hello, America! Are y’all paying attention to this?

“Who are you going to believe? Me, your Truthful Aunt Nancy, or that rusty bag of bolts, Big Red Car? I’m going to squeeze his headlights but good. Look into my eyes.”

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Cut The Crap — Energy And Inflation

Today we cut the crap about the impact of energy, specifically rising energy prices, and inflation.

 1. The Biden admin made some bold energy moves — cancelling the Keystone XL pipeline, mothballing drilling/leasing/auctions on public lands, cancelling ANWR development, generally pissing on the leg of the energy sector — immediately upon taking office and they have had a negative impact on the price of energy and gasoline in particular.

 2. Inflation — under control for more than a decade — has now reared its ugly head. Even Clown Princess Yellen, Sec Treas, has conceded that inflation will more than double in the immediate future.

Just ponder that one thought — a new admin comes into office and in less than nine months more than doubles inflation and they act like it was a paper cut.

 3. The price of gasoline is a cost component in every product — COGS cost of good sold, for you bean counters — made or transported in America. Everything.

Here is what YOY inflation looks like right now:

As you can see, ENERGY is the skunk at the garden party. It is a component of both Transportation and Housing.

[My personal road trip experience is that gas is up more than 100%. I like to buy gas at Sams Club. I paid $1.52/gal in Tuscaloosa, Ala a year ago. Today, it is right at $3.00/gal.]

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Inflation, The Skunk At The Garden Party

Everybody — meaning anybody with a functioning brain — acknowledges that the scourge of inflation is loose in the land.

The Fed — hats off to these guys for having kept inflation at below 2% for the last 10 years, well played guys — says it is “transitory” meaning it will recede, but they cannot define the driving force that will propel that movement.

Why will it recede? What will drive it back from the gates of the city? What force?

Nobody disavows inflation; they just say it is transitory, will be fine, or ignore it.

Shipping Costs as an exemplar of inflation

So, I did some research and came up with this particular example to underpin my opinion:

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The Debt Ceiling Kabuki Dance

Every few years, the United States rubs up against its mythical “debt ceiling,” a number which must be approved by the Congress to enable the Treasury to use debt to pay our national bills and conducts a ritualistic charade of acting like fiscally responsible adults — a bloody Kabuki dance.

Speaker of the House Nancy Pelosi and Majority Leader Chuck Schumer discussing the debt ceiling in costume of Japanese Kabuki dancers.

The debt ceiling is the maximum amount of money the US Treasury has authority to borrow in the form of bond sales.

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Inflation? Head Fake Or Reality?

We are told by the Federal Reserve in the person of its Chairman Jerome Powell that we are experiencing inflation, but that it will be “transitory.”

“Do not fret, dear, this inflation is transitory and you will be fine,” sayeth Jerome P during recent Congressional testimony. He then adjusts his glasses and gives you a grandfatherly look of confidence. But, should you feel good or is it all a head fake?

[Much of Christianity is built upon the notion that death is also transitory and that we shall live again in splendor with God in Heaven, but still we are dead. This is the story of inflation also?]

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A Hat Tip to the US Economy

I am quite bullish on the US economy over the short term — meaning until the Biden admin straps on the increased tax weights and we all try to swim with those babies drowning us. Hell, there is a great chance it may not even cross the finish line.

I am going to spend $6.3T + $3.5T and tax you back into the 1960s. Ooops. I didn’t mean to say that because I am a moderate and a unifer. Haha. Sorry. 

I like to take a look at a couple of bellwether companies to check my enthusiasm. One of those is Apple.

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