By Lee Adler
This post Wall Street, Retail Sales and Consumer Surveys appeared first on Daily Reckoning.
[This post is from Lee Adler. To find out more about his work – visit Wall Street Examiner by clicking HERE.]
The Wall Street Journal took note of the decline in retail sales reported by the US Census Bureau last week, headlining:
The Journal blamed drops in spending at gas stations and auto dealerships.
Their lead paragraph was emblematic of the stupidity and misleading nature of Wall Street and economic conventional wisdom.
“U.S. retail sales fell for the second straight month in March, a sign economic growth eased to start the year despite strong consumer optimism and steady hiring.”
Exactly how did the Journal know that consumer “optimism” was strong?
Answer: Surveys… particularly the University of Michigan Consumer Sentiment Index, and the Conference Board’s Consumer Confidence Index, also known as the Con Con Con Index. The real function of these surveys is to measure how well they have learned the lessons Wall Street has taught survey respondents. Consumers report not whether they have the wherewithal to spend or not. Instead, they report what they think they should say, based on the stock market.
Wall Street, the mainstream financial media, and the high priests of Economism have told consumers for years that the stock market is a reflection of the economy and forecaster of the economy’s future. When the bell rings as the stock market makes new highs, consumers salivate and regurgitate to survey takers what they have been taught. The stock market is going up, so the economy must be doing great.
This is where the dog chases its tail. The dog is the Wall Street media. The tail is the consumers who wittingly or unwittingly tell the Con Con Con survey takers little white lies about they think of present economic conditions, and what their expectations are for the future.
Wait a minute. The economists at the Con Board and University of Michigan can’t forecast the future. Even the Fed Almighty can’t accurately forecast the future. And the stock market appears to constantly overstate how good things are, and how good they’re going to be. Yet these economic sages think that asking consumers what their expectations are about the economy in the future serves some useful purpose, like predicting whether consumers will spend or not.
Then the dog, the Wall Street media, gets into the act of chasing its “tale.” It reports with great consternation that retail sales were down DESPITE consumer optimism. I can just see the financial journo crowd scratching its collective heads over that one, as they groom each other and pick the nits out of each other’s fur in their echo chambers.
The media and the economism high priests all assume that retail sales should reflect the stories that consumers tell survey takers. But all those consumers are actually doing are giving the pollsters a stock market report. “Oh the stock market made new highs. The stock market discounts the future [not really] therefore I …read more
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