Statistics. Numbers beloved of economists and analysts. Numbers and equations are their lives - they are comforted (one presumes) by all those neat little columns of figures. They refer to those of us who have actual lives as 'the consumer.' To economists, we form a collective of indistinguishable automatons, marching into stores with wallets and pocketbooks in hand, blithely (and blindly) spending, spending, spending. Core inflation is low, these educated, academic idiots say, so the consumer is fine. Never mind that the items that have risen in price the most, food and energy, are necessities, not luxuries; take them out of the inflation numbers because they are volatile, and voila, the consumer is just fine.
It never fails to amuse us when this happens, because we are consumers, and we understand what those intelligent morons apparently do not:CNBC Market Dispatches
10/14/2005 10:19:39 AM ET
Consumer concerns trump inflation relief
The latest measure of consumer confidence shows an unexpected decline. Consumer prices soar in September, but excluding energy prices show a modest gain. GE meets profit and sales targets.
Blame it on the consumer.
The market's giddiness about low core inflation, excluding food and energy prices, was short lived. A weaker-than-expected measure of consumer confidence, combined with disappointing retail sales numbers, cut the legs from under the early rally.
It was only weaker-than-expected by economists. Anyone who has to live by a budget could have predicted otherwise, as Bonnie and I did last week when we read that the consumer confidence report would be released today. But economists live in some cloudland in the high ether where the sun always shines and the consumer is flush with cash and happy to work at a dead-end, low-paying job.
The University of Michigan's preliminary measure of October consumer confidence came in at 75.4, compared to 76.9 in September. Economists were expecting October confidence to bounce back this month as consumers saw lower prices at the pump. But today's number was well below the consensus expectation of 80.
Retail sales weren't as encouraging either, rising just 0.2% in September, according to the Commerce Department. Economists predicted a 0.5% rise in retail sales. But excluding auto sales, retail sales rose 1.1%, stronger than the 0.8% expected.
The consumer price index (CPI) rose 1.2% in September, the largest jump in 25 years, compared to a 0.5% rise the month before, the Labor Department reported. Economists were expecting a rise of 0.9%. But the sharp rise was largely driven by high energy prices, which rose 12% following disruptions to supply by Hurricanes Katrina and Rita. Gasoline prices soared 17.9% last month.
The core CPI, which excludes food and energy, rose just 0.1%, half the 0.2% rise economists predicted.
"... which excludes food and energy ..." If we didn't have to feed ourselves, our furnaces, or our cars, we'd have enough money to circumnavigate the globe two or three times, living it up at each stop along the way. BUT ...
Economists. Will they ever learn???