Economic Data Isn’t as Strong as the Headlines Claim

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There has been a lot of economic data this month that looks strong. But when you dig a little deeper, you find that this “strength” is an illusion.

Following is a breakdown of several of these data points with some help from our friends at Passant Gardant.

Consumer Confidence

The Conference Board Consumer Confidence Index came in at 109.7 versus an expectation of 104. Last month, Consumer Confidence was 102.3.

“Consumer confidence improved in June to its highest level since January 2022, reflecting improved current conditions and a pop in expectations,” Conference Board chief economist Dana Peterson said. “Greater confidence was most evident among consumers under age 35, and consumers earning incomes over $35,000. Nonetheless, the expectations gauge continued to signal consumers anticipating a recession at some point over the next 6 to 12 months.”

But what exactly is driving consumer confidence higher?

Lower inflation expectations.

And lower inflation expectations were primarily driven by a big drop in energy prices. Gasoline prices are down over 20% from this time last year.

Falling gasoline prices aren’t a sign of a healthy economy. In fact, the expectation of a recession has put a drag on oil prices.

Rising Home Sales

Home prices rose 0.5% month-on-month in April and new home sales surged 20% year-on-year in May. But this sale of new homes is primarily a function of tight inventory in the existing housing market. Existing home sales were only up 0.2% and were down 20.4% from a year ago.

Home sales typically rise in the spring, so these positive numbers may well be an anomaly. Rising prices (another sign of sticky price inflation) coupled with rising interest rates will continue to put a drag on the housing market.

Durable Good Orders Up

Orders for manufactured US goods jumped 1.7% in May. Economists had expected a decline. This was immediately sold as a sign of a strong economy. But even MarketWatch conceded, “The industrial side of the economy is just muddling along.”

In fact, the entire increase was attributed to the extremely volatile transportation sector and defense spending for the war in Ukraine.

Excluding transportation, the last two months balance out to zero. Excluding defense, durable goods orders fell. Far from signaling a strong economy, the actual economic signal is contraction.

May Retail Sales Beat Expectations

Retail sales increased by 0.3% month over month and grew by 1.6% year-over-year. That sounds like Americans are buying a lot of stuff. But in reality, they are paying the inflation tax.

Retail sales are not adjusted for inflation. When you factor in rising prices, sales of actual stuff were basically flat month-on-month. And year-on-year the sale of goods and services on a quantity basis is down substantially when you adjust for 4% price inflation.

Furthermore, much of this spending is being put on credit cards. Again, this is not a sign of a strong economy.


Month after month, we get strong employment reports. But as we have reported, the Bureau of Labor Statistics data doesn’t make any sense. Furthermore, insofar as there are new jobs, many of them are due to people taking second and third jobs in order to make ends meet.


Don’t reflexively believe the headlines. Just because headline numbers look good doesn’t mean the economy is humming around. You always need to dig deeper.

Passant Gardant summed it up this way.

The government and mainstream media always try to paint data as rosy as possible in order to support consumer confidence, falsely believing that keeping people spending will somehow improve the economy. In reality, all it does is trick people into further overextending themselves and make things much worse. True economic growth is supported by a high savings rate and investment with low consumer spending. What we have is an extremely sick economy made much worse by central planners and mainstream media.”

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