Deep Thoughts On The American Consumer

A gauge of US consumer expectations still points to recession over the next 12 months. That’s the bad news.

The good news is that’s nothing new, and there hasn’t been a recession so far. The other good news is that at 77.8, the Conference Board’s expectations index was meaningfully higher this month versus October.

The coast is far from clear, though. “While consumer fears of an impending recession abated slightly, around two-thirds of consumers surveyed in November still perceive a recession to be ‘somewhat’ or ‘very likely’ to occur over the next 12 months,” the Conference Board, which expects a “short and shallow” downturn for the US economy in 2024, said Tuesday.

The headline confidence print — 102 — beat estimates. The range of guesses from 57 glorified astrologers who make six figures to be wrong all the time, was 97.5 to 107.

November’s MoM gain was the first since July, but October’s headline print was revised markedly lower, so… well, let’s just say “improvement” might be a euphemism if not an outright misnomer.

Part of editorializing around incoming macro data entails pretending that every release contains some sort of incrementally interesting tidbit. On most days, I can keep up the charade, but I’m not inclined on Tuesday. There wasn’t anything in this release worth mentioning. The labor differential was basically unchanged.

We know how American consumers are inclined to approach the current macro-policy-political conjuncture: They’re anxious despite abundant jobs, they have strong opinions about inflation (specifically, they hate it), they know now (even if they didn’t before) that disinflation isn’t deflation and the prospect of a Biden-Trump rematch in 2024 only adds to the pervasive sense of gloom and generalized disaffection.

And yet, despite all of that, they (Americans) are inclined to keep spending money as long as there’s money to spend (or credit to be had). Why? Simple: Because Americans are as profligate as they are dumb and overweight.

Incorporate that into your 2024 rate cut odds, and remember: It’s all meaningless in the end.