The coincidence of timing.

Just as the University of Michigan reported Friday an ever-so-slight uptick in consumer sentiment, the Bureau of Labor Statistics left us scratching our heads as to why, since employers initiated 1,534 mass layoff events that resulted in the separation of 299,886 workers from their jobs in the second quarter. Both layoff events and separations, BLS said, were at their highest levels for the second quarter since 2003.

To be sure, respondents to the Michigan survey may have been reacting to gasoline prices ticking down and the end of what appeared to a free-fall in the stock market. In the same survey period, though, we got new reports of a continuing plunge in home values.

The Michigan survey data closed the week on an upbeat note, albeit marginally, after otherwise disappointing reports of weak retail sales, soaring inflation and increasing unemployment.

Retail sales data for July reflected three phenomena: the end of stimulus rebates which were completed in early July, an ebbing of gasoline prices and a surge in food prices. The relatively weak retail sales in July suggest a slow start for the third quarter, weakest since the beginning of the fourth quarter of 2007 when gross domestic product growth was negative. Retail sales represent about 40% of total consumer spending, which is about 70% of the total economy.

The increase in headline inflation -- to a 17-plus-year high -- created added concerns for Federal Reserve inflation hawks. Core CPI (excluding food and energy) also rose, with every major expenditure category increasing in July at least as quickly as in June and in many cases even faster.

The Federal Reserve has been counting on energy-price increases to slow and a weak economy to keep both overall and core inflation in check, but those expectations have not materialized. While the still-rising inflation rate would suggest an increase in interest rates, the FOMC is constrained because of a struggling economy. The usual aphorism that the FOMC removes the punch bowl just as the party begins doesn’t apply, because the party hasn’t even started.

Last Thursday’s report on initial and continuing claims for unemployment insurance remained at elevated levels with continuing claims – a surrogate for hiring – underscored the weakness in the labor market. The details of the unemployment-claims report suggested widespread geographic weakness. While claims data in the last couple of weeks may have been affected by the additional 13 weeks of unemployment insurance approved by Congress, that impact has largely washed through and the weak hiring implied by the soaring continuing claims numbers is real. Both elements of the claims report – initial and continuing claims -- are reflecting cyclical realities: slowdown in hiring followed by an increase in layoffs. It compounds concerns for the Federal Open Market Committee. With jobs and earnings power weakening and consumer credit shriveling – as the Fed’s Senior Loan Officer Survey noted -- consumer spending will continue to slow, dragging the economy.

The upcoming week will bring new drags, with reports on home construction activity – which may be deceptive since growth in multi-family activity will likely inflate total numbers -- and inflation at the wholesale level. The economic highlights of the week though could come from Jackson Hole, Wyo., where the Federal Reserve Bank of Kansas City holds its 31st annual symposium on an important economic issue facing the U.S. and world economies. Symposium participants include prominent central bankers, finance ministers, academics, and financial-market participants from around the world, with Federal Reserve Chairman Ben Bernanke slated for a major address Friday. Though the gathering is largely academic, the roster of participants virtually guarantees it will influence the economic debate heading into the presidential election.

Mark Lieberman is the senior economist for the Fox Business Network. Prior to joining FOX, he served as first vice president and manager of economic analysis and research at Washington Mutual in New York. Before that, he served as senior vice president at Dime Savings Bank of New York (which was later acquired by Washington Mutual), where he specialized in credit and risk management. He is a member of the Executive Committee of the New York Association for Business Economics. He has a degree in Economics from the Wharton School of the University of Pennsylvania.