America's First Patent and Our First Financial Bubble

This is the Breitbart Business Digest weekly wrap, where we run through the important news and analysis from the seven day period that is about to perish. This week saw consumers telling pollsters the economy is awful even while they continued to shop without dropping, Kevin Warsh sent his critics into a frenzy by refusing to say more, and too many people smoked weed. And we celebrate the anniversary of America’s first patent—and note how the inventor who received it lost it all in the bursting of our first financial bubble.

Let’s go.

Consumer Sentiment vs. Consumer Spending

Is it the best of times or the worst of times? If you believe the University of Michigan’s consumer sentiment survey, we’re close to the worst of times. Recently, the survey’s famed index hit an all-time low. After a sharp recovery in July—thanks to lower gasoline prices—sentiment is still historically low.

But if you are tracking actual consumer spending, these appear to be good times for consumers. Personal consumption expenditures rose at a 3.2 percent pace in the second quarter, much faster than the 0.5 percent pace of the first quarter or the 2.5 percent pace of the year-earlier period. Despite higher gasoline prices throughout most of the quarter, consumers continued to spend on big ticket items—durable goods purchases were up at a 6.8 percent pace—and discretionary categories like restaurants, hotels, and vacation travel.

That’s not normal. When consumer sentiment sinks low enough, consumer spending typically follows. People pull in the purse-strings when the economy appears to be bad. But this time we’re seeing the opposite: consumer sentiment falling to record lows while spending growth accelerates.