Inflation “Cooled” in June, So Why is Consumer Confidence Still Tanking?

The recent CPI report showed that inflation is, according to official data, cooling down — so why are consumers more worried for the future than they’ve been in months? If prices are coming down, shouldn’t that fuel higher confidence and a greater collective sense of economic well-being? One simple answer is that the official data is cooked, using “updated” methodologies that make the picture look as positive as possible regardless of how much Americans are actually struggling.

There’s too much incentive (and ability) to distort the data, and what should be effective, objective measures of economic strength are anything but — they’re as vulnerable as anything else to political interference. This leads to devastating policy decisions and endless malinvestment from central planners, who fumble hopelessly as they seek to control a system of near-infinite complexity.

With all the mathematical gymnastics required to make it look like inflation is under control, the Fed is desperate to justify cutting interest rates in September, and possibly again in December to prevent a banking crisis. This would offer relief to the low rate-addicted system in the form of a cheaper cost of borrowing. But with real inflation far from under control, and much higher interest rates required to wrangle it back down, all rate cuts will do is cause the real inflation powder keg to explode in earnest.

Widening fiscal deficits seem bound to get worse as out-of-control spending shows no sign of stopping, all but guaranteeing that inflationary pressure keeps increasing as the trillions printed during COVID keep sloshing around in the economy. Economists and bankers have begun to flash alarms with a broader recognition of the US’s dire fiscal straits, but actually addressing and fixing the problem meaningfully is a political dead-end. Politicians just love spending other people’s money. As CNBC reported JPMorgan Chase CEO Jamie Dimon saying in his recent statement:

“…there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world.”

Dimon thinks that those inflationary pressures mean that the Fed may not be able to cut rates as soon as it would like. And anyone who has been buying groceries between 2020 and today knows the CPI numbers are nonsense. The US government claims that CPI fell 0.1% in June, resulting in an annual inflation rate of 3% — down from 3.3% last May. But while official numbers are endlessly skewed, Americans’ bank accounts and credit card statements don’t lie.

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Just take this one example, from a TikTok video that went viral, where a guy recorded himself using the “reorder all” button on a Walmart order from two years ago. The exact same grocery order which just a couple of years back resulted in a total of $126.67 now costs $414.39, laying bare the absurdity of government inflation claims for all to see.

A man reorders his identical Walmart shopping list from 2022 for 45 items.

2022: $126
2024: $414

The same basket of goods nearly quadrupled in price in just two years!!

We need more people to run this same exercise and share your videos. pic.twitter.com/PqubvdV7vS

— Charlie Kirk (@charliekirk11) June 27, 2024

CPI is one example, and jobs reports are another. If Americans need two or three jobs to survive, that’s construed as a good thing because there’s “more” employment. And after reports are initially released and the current administration takes credit for the rosy numbers, they’re often readjusted downward. Not all jobs are equal in terms of the economic picture they paint. For example, manufacturing jobs, where employed people are creating domestic goods of real value, went down from May to April.

Is a robust increase in the number of people working minimum-wage jobs they can’t use to pay their bills a good sign for the economy? Clearly not. But the jobs numbers try to make it look that way by any means necessary, since it makes the current administration look good and makes the Federal Reserve appear to be achieving its goals of “maximum” employment. Which, by the way, doesn’t mean that everyone has a job — it means that enough people have a job for the Fed to achieve its made-up 2% inflation target.

Regardless of what the government and central banks put on their charts and say in their meetings and press conferences, Americans are the ones living the reality. They’re real people, not numbers on a cooked report, and they won’t be fooled. And despite the arrogance of central planners, the can can only be kicked down the road for so long before reality kicks in, and a devastating economic crisis rears its ugly head.