Mike “Mish” Shedlock reports that the latest Gallup numbers on self reported consumer spending, consumer confidence and consumer expectations all worsened, and at the same time confirmed the reversal of a slightly favourable trend that was in place until May.

In a reversal of trend where 2010 had been slightly better than the depressed 2009 (but still far worse than 2008), August 2010 consumer spending is coming in below the August 2009 number. At the same time, consumer confidence and expectation that the economy will get worse are also showing the same trend reversal relative to slight improvements registered in prior months.

There is no chance of a housing recovery in this deteriorating climate, and without prospects for a housing recovery, there is no end in sight to the deleveraging and debt deflation. Indeed, an illuminating story about the housing situation is about the developer who, through insisting on high pricing, has not managed to sell any of his 141 new luxury apartments, which he built with $40m of his own cash, and who is now trying to lease them. Assuming he can rent everything, which is far from a foregone conclusion as he appears to be making the same mistake of above-market pricing with the rentals also, he will be better off because the rent will exceed the deposit interest banks would have paid on his $40m; but if he had borrowed that money to build the flats, or in opportunity cost terms, the guy would be losing money. This is three years into the housing market crisis, and still there is no end in sight, providing proof if any were still needed that this recession is different from all other recessions in living memory.