Gallup

Broadly speaking, "blowback" is the unintended consequence to the civilian population of secret government operations. It is typically used to describe the consequences of overseas covert operations. But there is another kind of blowback brewing in the U.S.: the negative consequences of massive covert manipulation of the domestic economy by the Federal Reserve and agencies of the Federal government. A key feature of propaganda is the "documentation" presented to support a politically advantageous distortion. In all cases, the numbers are doctored in a coordinated covert campaign to persuade the public that the economy is growing smartly. The stock market has doubled as a consequence of a declining dollar and other policies of the Federal Reserve designed to incentivize speculation in "risk trades" such as stocks and "carry trades" in currencies. The jobs report is heavily reliant on the "birth-death model" of small businesses, an opaque Federal guesstimate of the number of new small businesses being started and those being closed. As reliably as clockwork, hundreds of thousands of "created out of thin air" jobs are logged as if they were real by the Bureau of Labor Statistics' "birth-death model." Yet in the real world, the number of small businesses has been in a three-year free-fall.

Brief and comprehensive summary of the week's key bullish and bearish events

Of course the Government is still borrowing $140Bn a month and the Fed is still "easing" by handing their Bankster buddies another $120Bn a month so our run rate, at the moment, is still $3.1Tn a year to keep all these plates spinning.

How can so many Americans believe that we’re in a depression, when the stock market and commodity prices have been booming?

Probably the only piece of economic news that matters today, and possibly all year, no scratch that, since the "End Of The Recession" (NBER ^TM) - according to Reuters: "The April 20-23 Gallup survey of 1,013 U.S. adults found that only 27 percent said the economy is growing. 29 percent said the economy is in a depression and 26 percent said it is in a recession, with another 16 percent saying it is "slowing down," Gallup said." That means that more Americans think the country is in a Depression, let alone recession, than growing. Cue crickets and a Bernanke press conference where he discusses alien abductions and 8 toed mutant Madagascar lemurs.

The most concise summary of the key positive and negative events over the past week.

Putting aside the S&P threat to downgrade U.S. debt for the moment, consumer and business confidence is weakening, which would be consistent with other data we are seeing about such diverse things as retail sales and industrial production. This is consistent with our forecast for stagflation.

Following this week's ebullient UMichigan consumer confidence readings (which continue to diverge from reality as per Gallup which oddly enough does not poll Wall Street CEOs who are always eager to give their economic assessment from the infinity pool while vacationing in Fiji) one would think that the price of gas had fallen of a cliff. Alas no. In fact quite the opposite. And the propaganda logic of the domestic ministry of disinformation, consumers in Hawaii must be by far the most confident as it is the state where gas prices are now at virtually all time highs, well ahead of the peak summer driving season. Businessweek reports: "Hawaii's average price for a gallon of regular unleaded gasoline hit a nation-leading $4.46 on Thursday, 28 cents higher than second-place California. The national average reached $3.81, according to AAA data. Wyoming had the cheapest gas in the country at $3.53. As many states brace for gas to climb to $4, Hawaii was the first to reach that mark a month ago. The Aloha state's average on Thursday was 12 cents higher than a week ago, according to the automobile association." The weekly increase is double what the national spike for regular gas was, which moved from $3.750 to $3.818 in the span of a week (compared to $2.858 a year ago). And as the LA Times reports, the ongoing surge in gas prices has led many to paradoxical outcome of literally run out of while driving from station to station looking for the cheapest refuelling option.

Once again confirming that sentiment indicators are completely irrelevant and thoroughly misleading at best, we have the UMichigan consumer sentiment coming out at 69.6 compared to expectations of 68.8 and up from the March 67.5 print. This number is a rather stark contrast to the recently highlighted Gallup consumer confidence which plunged to August 2010 levels. And looking at current economic conditions index confirms that since 2010 the economy has gone precisely nowhere. But most notably, 1 year inflation expectations are still at the highest since 2008 at 4.6 unchanged M/M. All that of course is irrelevant as the algos just scanned the headline and go batshit, lifting every offer with gusto.

• Bailout a ‘Flawed Plan’ Forced on Irish People (Irish Times)
• Obama’s Debt Plan Sets Stage for Long Battle Over Spending (NYT)
• America Must Give Up on the Dollar (Michael Pettis)
• Banks Forced to Pay Foreclosure Victims as Talks Continue (Bloomberg)
• Budget Rises as Most Important Problem to Highest Since '96 (Gallup)
• Calls grow for Japan PM to quit in wake of quake (Reuters)
• Find the discrepancy of these two headlines:
  • China to See More Interest Rate Hikes in Q2 (China Daily)
  • China Banks Said to Need $131 Billion of Equity Over Six Years (Reuters)
• Hong Kong Considers More Property Measures (WSJ)
• Glencore seeks up to $12.1 billion in IPO, no chair yet (Reuters)

Busy day with quite a bit on the economic front: if Gallup is right March retail sales will be weaker than expected. Other key events include the JOLTS survey, business inventories, a Treasury auction and the inverse - POMO; and last Obama is presenting at noon his deficit reduction plan.

For anyone wondering why a hypothetical situation in which Bill Dudley met with former colleague Jan Hatzius and told him "ok, we bailed you guys out, now it's your time to kill oil" seems all too possible in our day and age, the latest news on the economy from Gallup should make it all too clear. As of April 11, the polling agency's Economic Confidence Index has dropped to -37: the lowest reading since August of 2010. It appears that disgust with $4+ gas (Poverty Effect for all) is more than offsetting Brian Sack's attempt reclaim the Russell 36,000 (Wealth Effect for some). Gallup's conclusion is absolutely spot on: 'Global events, continued political battles about the budget in the
nation's capital, and a weak, if modestly improving job market add to
consumer uncertainties. As a result, it is not surprising that consumer confidence plummets even as Wall Street continues to do well. However,
if consumers continue to lack confidence and spending doesn't increase,
it is hard to see how the U.S. economy can continue its modest
improvement. In turn, it would seem Wall Street and Main Street will
have to align at some point going forward. Either Wall Street will prove
right and economic conditions on Main Street will improve or the
reverse will prove to be the case."

Here are some quick hits of economic data that have been reported in the past several days. I am convinced that "something is still happening" in that we are seeing continuing signs of improvements in most major categories of economic data (excluding the real estate markets) and we would be foolish to ignore the trend. But ...

The economy is in a structural readjustment that will leave the middle class higher and drier. Long-term factors will continue to negatively affect employment. We are headed to a higher level of permanent unemployment than the 5% that existed in pre-crash 2008.

The employment numbers are improving, but are there sufficient forces to drive a robust improvement? If not, what do these numbers really mean? Well, relatively little, unfortunately.