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The American Economy Is Humming Along

This morning the Census Bureau released numbers for retail sales in January, and the news is good: they're up 5.3% compared to last month.

I don't really understand why anyone would care about how the January numbers compare to December, though. It would be better to compare them to January 2020. Or, better still, just take a look at the raw numbers over time:

After the big dip in 2020, retail sales recovered immediately. Since June of last year they've been consistently above trend—and in January they were way above trend. If my arithmetic is correct, this means we've nearly made up completely for the spending collapse in March-May of last year. This is all thanks to the coronavirus rescue bills that we've passed so far, with the one wending its way though Congress right now set to finish the job.

Despite the pandemic, spending is high; savings are high; and earnings are high. There are still legitimate fears about whether employment will rebound completely this summer, but that's true of nearly all recessions. Overall, we have good reason to be pretty optimistic about the state of the economy.

35 thoughts on “The American Economy Is Humming Along

  1. rorywohl

    Hi Kevin,

    One of the things I struggle with is that, in the aggregate you're right (& econ is all about the aggregate), but what do we tell the individual who has lost their livelihood as a result of the pandemic & has only the patchwork, largely inadequate U.S. social safety net to rely on?

    I remember back in 2011 when the then-president of the New York Fed, William Dudley, tried explaining inflation to a group of people and, well, let Reuters tell it:

    "'Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful,” he said.”You have to look at the prices of all things.'

    This prompted guffaws and widespread murmuring from the audience, with one audience member calling the comment 'tone deaf.'

    'I can’t eat an iPad,' another said."

    (https://www.reuters.com/article/us-usa-fed-dudley-ipad/ipad-price-remark-gets-feds-dudley-an-earful-idUSTRE72A4AC20110311)

    I don't how we bridge that divide between the aggregate and the individual.

    1. golack

      Well said.
      Retail spending may be up, but it's not going to the closed local restaurants and mom&pop stores. What will the retail environment be when we open up? If you buy local, that supports the local tax base and helps local schools and towns. If you watch local TV or go to movies (when they re-open) instead of streaming, more money stays local.
      These are interesting times.

        1. golack

          Limited. And though numbers are falling, they are still too high for indoor dining, especially if alcohol is involved. Getting down to "medium risk", ca. 10 per 100K new cases a day, would be great.
          How this finally plays out will depend on the new relief package, and how we've changed.

          1. Atticus

            There's been indoor dining in Florida for many months. I can't think of any/many retail area or other aspects of everyday life that's still being impacted by the pandemic here in FL. For many months the only difference between now and "normal times" is that people are wearing masks. I know different states and regions are different but for big chunks of the country, like us in FL, we kind of scratch our heads when others talk about opening up at some point in the future.

    2. ScentOfViolets

      "One of the things I struggle with is that, in the aggregate you're right (& econ is all about the aggregate), but what do we tell the individual who has lost their livelihood as a result of the pandemic & has only the patchwork, largely inadequate U.S. social safety net to rely on?"

      You tell them that they have the power, in the aggregate, to make things better for themselves -- a lot better. You tell them to vote for the Democrat, always, and even so, it's going to be a while before things get better because they have a studied history of voting for Republicans.

      Lastly, you tell them you don't believe they're that goddamn dumb and that you shouldn't be such phatic phuc yous to the people who are trying to treat them like adults.

      1. ScentOfViolets

        That should be asking patently dumb and dishonest questions as phatic phuc yous to the very people who are trying to treat them like adults. This commenting system could be better.

  2. Steve Stein

    Just watch - people will start attacking Biden for not keeping gas prices low when the economy opens up after successfully getting Covid under control.

    1. Austin

      I’m pretty sure people will blame Biden for absolutely everything that occurs, including for letting Covid into the country a year before he took office and the entire death toll from Covid. Republicans are good at pinning everything wrong on Democrats when Democrats are either in or out of power.

      1. KenSchulz

        Republicans are good at sh!tting on the US when there is a Democrat in the White House, and then blaming the President. It works because people ascribe too much credit or blame to Presidents and not enough to Congress, for government successes or failures. For my part, the filibuster as it exists should end. Either abolish it outright, or make the minority stand up there and talk, no food or bathroom breaks. The filibuster originated in the Senate’s wish not to limit debate. So, debate, none of this namby-pamby filibustering-in-name-only.

        1. MontyTheClipArtMongoose

          They could even sell sponsorship for the live presentation of the return of Talking Filibusters. Talking Stick Casino. Consumer Cellular. Spike Lee's update of Scorsese's Talking Heads documentary that just came out.

        2. Austin

          To be fair, Republicans are pretty good at sh!tting on the US and then blaming Democrats when they’re in power too. Look at Texas right now: Democrats haven’t been in power there for decades, and yet somehow it’s Democrats fault that the state has a failing power grid.

          It’s just that usually when Republicans are in charge, Republicans throw out enough red meat (tax cuts, conservative judges, racist actions, etc) to distract enough voters from noticing Republicans are sh!tting on them. Eventually though the voters notice they’ve been shat on and vote Democratic so that it can all be cleaned up.

          Republicans are the elephants stomping around aimlessly and destroying everything. Unfortunately, out of a misguided attempt to be mature and decent adults, Democrats have fallen into a cycle in which they’re always the shovelers behind the elephants cleaning up the poo. It will continue this way until Democrats band together to lock up all the elephants and make them sit in their own messes.

    1. theAlteEisbear

      Thank you. Aggregates don't seem to be able to distinguish between brick and mortar and Amazon warehouses, but I was hoping Kevin would at least raise the issue. We have, since the pandemic became an issue, have been ordering everything through the mail for the simple reason that we don't want to expose ourselves to the virus just to buy an item in a store.
      I should add that we do takeout and buy gas from local vendors, but that is very small potatoes. However better that than possibly dead.

      1. Crissa

        The point is, there's not reason to believe the local economies won't return. The fundamentals are sound, we're supporting unemployment, as fear and needed restrictions are loosened, jobs should be created.

        1. KenSchulz

          This will be true assuming the Democrats ram through a big Covid-relief package. I think of it as ‘mothballing’ several large sectors of the economy until the pandemic is under control.

      2. ScentOfViolets

        Sorry for the late reply; I had to think about this one and consult an expert -- my daughter. Yes, it is a sad and terrible thing to see warehoused deliveries replacing brick and mortar. but other than my own personal feelings, so what? From my own informal observations and biased sample, I can tell you that like, having fine china (and storing it in it's own cabinet, natch), feeling that you have to shop in a store for your day-to-day items is something the News don't get. We can lament the passing of our youth -- the drive-ins, the big cars with bench seats and window wings, the formal dinner party accoutrements, etc., but I wonder just how much the loss of those things really mean. In an aggregate economic sense, of course 😉

        1. theAlteEisbear

          My impression is that those of us who avoid the statistical view tend to relate instead to anecdotal evidence that surrounds us, which evidence is replete with "did you hear, so and so shut down their business?"
          When you know these people, it affects your viewpoint when someone like Kevin makes completely logical statements which do not account for local variables. Obviously you know this, but I'm saying it for myself.

          1. ScentOfViolets

            The businesses that shut down are my business establishment. The businesses that are opening, by contrast, are my daughter's business establishments.

            TL:DR: When tems like 'media influencer' trip off here tongue, they don't sound at all contrived or pompos-academic.. You know, the way they would sound if me or anyone my age used them.

  3. Austin

    “If my arithmetic is correct, this means we've nearly made up completely for the spending collapse in March-May of last year.”

    As several people have already alluded to, it’s not just the total spending that matters but the distribution of that spending too. If the nation spent $450B in January 2020 at 1 million stores and restaurants and now is spending $500B at just 500,000 stores and restaurants because the others are all closed either temporarily or forever, that’s not necessarily an improvement for the nation’s overall economic situation even though total spending did increase by $50B.

    You would think Kevin would appreciate distributional effects more.

      1. KenSchulz

        I didn’t read anything in Kevin’s post about online vs. local in-store sales. And he didn’t apparently link to the source data. Do you have further info?

          1. KenSchulz

            So, if online is up substantially in the aggregate, while overall several sectors are down, YOY, that implies that in-store for those sectors was down.

          2. ScentOfViolets

            You know what's a tragedy? Coal is down. Buggy whips are way down. And from previous comments you've made, you actively want oil and natural gas down. Since those things happening imply a large loss of jobs across whole sectors of employment, you must think that's a good thing as well.

          3. KenSchulz

            Scent -
            Direct employment in renewable energy is already several times that in fossil fuels. Job losses in fossil fuels will be more than replaced by jobs in wind, solar, and biofuels. Yes, I think that is a good thing.
            https://www.eesi.org/papers/view/fact-sheet-jobs-in-renewable-energy-energy-efficiency-and-resilience-2019
            I’m not going to try to track down data, but I’m quite sure that auto-industry employment has been a much larger fraction of the labor force than buggies ever were. (Buggies were a luxury purchase for doctors and bankers. Most workers walked or took streetcars.)

          4. ScentOfViolets

            You left out how the loss of oil/gas will affect employment in related and dependent sectors as well as a few other things.[1] Be that as it may, you do realize that you just made my point, right? If loss of business and employment is matched by gains of both in a related sector, who cares? Well, you seem to, but you've not made your case as to why the rest of us should think so to.o TL;DR: If Kevin is being sloppy, then by your own metric, you're even sloppier.

            [1] For example the trend has been down for all brick-and-mortar retail business -- including your much-cherished Mom & Pop stores -- for years and years before and irrespective of the pandemic. Yet you did not bother to mention this fact, which leads me to conclude as a matter of logic that you don't think this is irrelevant. Better analytical chops, please.

      2. Austin

        Thanks Crissa for your snark. What exactly did I miss though in reading Kevin’s “everything’s back to normal in the national economy” post that invalidates what I wrote?

        (I do know the number of stores and restaurants are wrong both before and after covid - I just made those up because I was too lazy to look up how many stores and restaurants exist in the US. But the aggregate spending figures are taken directly from Kevin’s chart for Jan 2020 and 2021.)

  4. D_Ohrk_E1

    What you're looking at is the Amazon online retail growth chart. Brick and mortar are still struggling. If that's a sign that the economy is humming along, I think we have different definitions of what are the signs of a good economy.

    1. ScentOfViolets

      Yes, you do have different definition of what are the signs of a good economy. I'd suggest you take some economics classes and learn some STEM discipline, but I get the sense you have issues with the subject and quite like being sloppy. Different strokes, I guess.

        1. ScentOfViolets

          Sounds like somebody didn't get that training and resent those that did. I don't know how to break this to you gently, cupcakes, but it's not my fault your open mike material bombs. This is classic bro comedy.

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