This morning the halfwits on National Propaganda Radio reported that both Hopey-Changey and the Bane Capitalist (sic.) are trying to "lower expectations" as the first face-to-face debate approaches. That got me thinking about "confidence" and "hope" and the like. There are measurements (indices, achieved through polling) for the former, but I rarely discuss them. I should, though, for are they not the closest thing we have to a direct gauge of just how deluded Americans are?
Let's start with Tim Iacono's remarkable consumer sentiment/S&P 500 graph.
Tim says "Here’s another data point on the remarkable improvement in the American mood that, according to Gallup data reported in this item earlier in the week, has been due almost exclusively to those aligned with one political party. As shown below, the Reuters/University of Michigan consumer sentiment index fell slightly from a mid-month reading of 79.2 to 78.3 in the final September reading, up sharply from 74.3 in August."
You can see the seemingly significant correlation between "consumer" sentiment and the stock market. If we look at the Gallup data Tim mentions, as reported by Brad Plumer, we see that it is mostly Democrats who are upbeat.
So what’s driving this spike? One obvious possibility is that the economy is improving and consumers are feeling upbeat.
I have more to say about this "obvious possibility" below.
Another theory is that consumer confidence is a largely useless economic statistic that simply tracks the stock market, which is the indicator that flashes on television most frequently.
But a third possibility is that the confidence boom is mainly driven by the election and partisan politics. Check out this chart from Gallup:
Thus Americans who identify themselves as Democrats might as well be on acid or doing mushrooms or whatever floats their boat. You can see how this ties in to my recent remarks about the inestimable Paul Krugman, who (in my words) seems to think the economy is poised for take-off.
Back in the Real World, the world which exists outside of malfunctioning Big Brains and Bad Programming, the economy is going down the tubes. In their third and final estimate, the Bureau of Economic Analysis (BEA) decided things were actually worse in the 2nd quarter than first reported, as e-mail correspondent Rick Davis of the Consumer Metrics Institute explains—
In their second and "final" revision to their estimate of the second quarter 2012 GDP, the BEA found that the annualized rate of U.S. domestic economic growth was 1.26%, down about a half percent from last month's estimate — and down about three quarters of a percent from the 1.97% reported for the prior quarter (and down nearly three percent from the 4.10% growth rate for the 4th quarter of 2011).
The changes in the GDP growth shown in this report do not represent actual month-to-month changes in the economy, but merely a refined understanding of the previously reported data for the second quarter.
But it was this alarming chart from Lance Roberts that seems to clinch the deal.
Lance says — "The chart shows the annual changes in Durable Goods Orders as well as Nondefense Capital Goods Ex-Aircraft. Historically, when the annual rate of change of these two indexes have simultaneously printed a negative reading the economy was in, or near, a recession. As of the most recent report Durable Goods Orders showed a -6.7% annual decline while Nondefense Capital Goods showed a -3.1% decline."
If that chart is something to go by, and it appears to be something we can take seriously, Americans are stepping into some deep, deep shit as the election approaches. If the election were not taking place, the recession we're in, or are going to be in shortly, would surely be the almost the only thing people would be talking about. As things stand, Democrats think we're on the verge of Economic Greatness, presumably because they think Hopey-Changey is a shoo-in.
Allow me to make a small prediction about our immediate future. Think of the economy and our confidence about it as a dirigible, aka. a blimp or zeppelin. When this election is over, and one of these clowns has been elected to the Highest, Most Important Office ever conceived, the helium hydrogen is going to rush out of this Gigantic Gas Bag with a Mighty Whoosh.
This event will be akin to the extraordinary hangover one feels after a three-day binge, or in this case, a 22-month political bender which is fast approaching its necessarily unhappy conclusion.
Democrats may be feeling confident at the moment, but just you wait and see. These Democrats are very likely going to get what they want, not heeding the warning which says you should careful about what you wish for because you might just get it.
Bonus Video — Oh, The Humanity!