Little Confidence in the Consumer Confidence Index

The Consumer Confidence Index declined marginally for the third month in a row. The the mainstream media and the Democrat Party (usually one in the same) immediately concluded that the cause of such decline was President Donald Trump’s insistence on reciprocal tariffs with nations with whom the United States does business and that those same tariffs were going to cause a strong inflationary cycle coupled with a significant recession. Those conclusions are just about a specious as the accuracy of the Consumer Confidence Index.

The Consumer Confidence Index is an amalgamation of a number of other indices produced by government agencies. Each one is subject to manipulation by the bureaucrats in charge. For instance, included in the calculations are the figures for employment growth in America. You may remembers that former President Joe Biden (D) spent an inordinate amount of time during his campaign touting the number of jobs created during his tenure. Of course, he never mentioned that most, if not all, of the job growth was just due people returning to work after the COVID shutdown which Mr. Biden engineered. But even more important was the disclosure that job growth numbers were inflated by nearly 900,000 jobs. Oops! Turns out that the bureaucrats at the Bureau of Labor Statistics were just doing their part to help Mr. Biden’s re-election efforts and, in turn, secure their jobs for another four years. They hated Mr. Trump’s promise to stream line the federal bureaucracy putting their jobs at risk.

There is in life a phenomena known as chaos theory, or sometimes described as the butterfly effect. It was best described to me in terms of pool or billiards. In effect, if you line up to strike a ball such that it strikes a subsequent ball and you do no hit it at precisely the right angle, the path of the second ball will be altered and if there are subsequent balls, their path will be more substantially altered. The more variables there are in any decision can result in widely different results if each previous decision is not precisely made with regard to the second decision. The amalgamation of indices then would suggest that any error in the one index will effect on the accuracy of the second index and even more so with regard to the third and further indices.. The amalgamation of indices, such as the Consumer Confidence Index is a fragile output made worse by speculation as to what it means.

What this should remind us is that virtually all of these figures produced by the federal government are based on estimates, computer modeling (garbage in, garbage out) and fluctuating standards. Virtually all of these indices, like political polling, are based on sampling selection, weighting and personal bias in adjustments. In most instances, the out put from the indices are reliable indicators of where we have been – but not always. In most instances they are a reliable estimate of where we are going – but not always.

For example, the fact that the decline in the Consumer Confidence Index is for the third month in a row is fact. The conclusion that it has anything to do with tariffs is baloney. The cutoff date for the data for the latest index was February 19 – meaning the cut off for data collection for the previous two months were approximately December 20 and January 20 respectively. That means that the data collected were reflective of two months under Mr. Biden and one month under Mr. Trump. In the former two months, tariffs had not been changed under Mr. Biden and in the past month the size and breadth of tariffs are mostly in the discussion, rather than the application stage.

It is just as likely that any change in the Consumer Confidence Index is more reflective of the dismay in the business and private sectors of the economy over the disclosures of the extent of corruption in the federal bureaucracy and the waste and fraud that are a part of that corruption. It is indeed disruptive to learn that the government upon which you have relied is not reliable and that you are left to chart your own course in spite of what the government claims is fact.

In other words, equating the decline in the Consumer Confidence Index with either tariffs or inflation is a stretch at best and more political rhetoric pushed by the mainstream media at worst

The collection, organization and distribution of information from the federal government should reflect political agnosticism. It doesn’t today and that is a condemnation of the bias of the bureaucrats and the politicians who either encourage it or refuse to police it. Perhaps, when Elon Musk and the Department of Government Efficiency finish with wringing out waste, fraud and corruption in the federal government, they could turn their attention to the accuracy of the information gathered and disseminated by the government and expose the manipulation that occurs regularly.