Gallup

Despite ongoing low gas prices, a recovery in stocks, and the nationally-advertised unemployment rate remaining low, Consumer Confidence tumbled in October from eight-year highs to three-month lows. Worse still, "hope" slid to its lowest in 3 months as "jobs plentiful" slid notably with fewer jobs and decreasing income.

While we knew the quantitative answer to the biggest conundrum stumping economists, namely that Americans bought even more gas with their gas savings, we were missing the qualitative one. Courtesy of the NYT we now learn that not only did consumers not redirect their spending to other discretionary items, but engaged in an act that has stunned economists around the globe: they don’t just buy more gasoline; they bought more expensive gasoline!

Thanks, we presume, to a resurgent stock market (because almost every macro and micro fundamental data item has been a disaster), UMich Consumer Sentiment rose from 89.0 to 92.1, bouncing after 3 straight months lower. Both current situation and futures expectations rose (the former to near cycle highs). Good news right? Be careful what you wish for however, as The Fed's Bill Dudley previously noted this consumer confidence data is a must-watch for The Fed in its rate-hike decision-making.

One year ago we reported that companies were using secured bank debt to repurchase stock: a stunning, foolhardy development. It so unbelievable we promptly forgot this bizarre tangent into "use of loan funds"... Until today when we found that it was, indeed, all a lie and that the banks themselves had become complicit in perpetuating not only the worst possible capital misallocation, but being an accessory to the US stagnation, soon to be replaced with full-blown recession.

One of the main reasons why the BLS has been massively overstimating job creation ever since great financial crisis, is due to the well-known birth-death adjustment, aka the CES Net Birth/Death Model, which quantitatively is shown on the chart below, has resulted in the "addition" of some 5.3 million jobs, that don't actually exist, but are merely modelled by the BLS which continues to assume the same new business creation/destruction dynamics that existed before the crisis. The is a big problem with this fundamental assumption: it is dead wrong. Here's why...

Most Americans Think Government Corruption is Biggest Problem

They are spending it on... gas.

The latest BAC credit and debit card spending data is out and it is not pretty, and not just for the mid-level consumer who, as documented previously, has been tapping out ever since April as the following Gallup consumer spending chart shows but also for the high-end.

According to what is arguably the most respected polling organization in the US, consumer confidence has crashed to the lowest level in a year. On the other hand, according to a tax-exempt research organization, consumer confidence is not only the highest it has been in 2015, but it practically the highest since 2007.Someone is lying, we leave it up to readers to decide who.

The current surge in dis-inflationary pressures is not just due to the recent fall in oil prices, but rather a global epidemic of slowing economic growth. While Janet Yellen addressed this "disinflationary" wave during her post-meeting press conference, the Fed still maintains the illusion of confidence that economic growth will return shortly. Unfortunately, this has been the Fed's "Unicorn" since 2011 as annual hopes of economic recovery have failed to materialize. However, it is these ongoing views of optimism that have collided with economic realities.

This is the sort of thing you’d expect to see in a Banana Republic. Which makes perfect sense, because America is a Banana Republic.

Government poses a threat to liberty, that much is clear. But what may be surprising is that almost half of Americans clearly identified government as a clear and “immediate” threat, and are obviously outraged about what is going on. It is time that Americans embrace their anger at government, and focus their attention past the politicians to the real problem. Start with the bankers, follow the money, and see where it goes...

While Mr. Dimon's view - "Amerca has the best hand ever dealt right now." is certainly uplifting, it is a bit delusional. But of course, give any person a billion dollars and they will likely become just as detached from economic realities. Does America have "greatest hand ever dealt." The data certainly doesn't suggest such. However, that can change. We just have to stop hoping that we can magically cure a debt problem by adding more debt and then shuffling it between Central Banks.

The greater the economic freedom, the wealthier and happier the people. States with more libertarian free market policies enjoy better results: greater median incomes, a more equitable distribution, less poverty, greater success for minorities and immigrants, and higher overall levels of happiness and well-being. In the political rhetoric landscape the battle of ideology is fierce and filled with demagoguery; in the real world the difference in results between competing economic policies are strikingly clear.