Retail spending was up in October:
This is yet another indicator that the economy is still running hot and will probably continue to do so as long as savings remain high and stimulus money is coursing through the nation's households.
How long will this last? I don't know, but I'd take a horseback guess that $2 trillion might take a year or so to burn itself out. In other words, high spending and the resulting high inflation might well last until March of 2022 or so.
Just a guess!
It's also a golden age for skilled tradespeople. Just try to book a contractor, plumber, or electrician in my town. They don't even answer their phones any more.
My guess business will slow noticeably by next summer.
That's the case in my area going on a few years now. You can't get any small projects down because they are all working on full house remodels and builds.
This is part of the inflation "mystery". This needs to slow down back to trend in 2022 to trigger large yry decreases. That was the plan. Inflate in 2021 and deflate in 2022.
We will know that core sales are dropping when the trade deficit starts declining.
Omg. I nearly spit out my chipotle burrito bite when I saw this comment. Did you manage to write a comment that doesn’t irrelevantly and insultingly invoke any ethnic, racial or religious groups?! Am I dreaming or did your nurse just up your meds today?!
100 points to you!
Thank you for saying it first.
WordPress really has to be realistic & provide an upvote option.
Obviously an imposter.
Mixed adrenochrome with his vodka.
The boom/explosion in spending is also fueled by the impending holidays: gifts, travel, food, which in turn are off the charts since people think "the rona is over!"
Which makes "inflation" worse, because there's too much money chasing too few, transport chain-diminished goods. Why the "Librul Media" assume this will be a permanent condition is beyond me. But of course, they don't think much beyond the next click.
Well, it is over from a consumers view. Their excessive spending will end as well deflating 2022. Media will then forget about it by fall.
Until March?! Oh. My. GAWD!! The Biden presidency is a failure! The Democrats are dooooomed!! INFLATION MONSTER COMING TO EET US IN OUR BEDZ!!!
Nonsense. The INFLATION MONSTER stories will continue till March; then prices and spending will return to normal and the MSM will run headlines about the BIDEN RECESSION MONSTER!!!
Inflation because retail spending is up?
Isnt that like saying food inflation because look at only beef prices?
Total consumption paints a bit of a different picture. Spending jumped in Q1 and Q2, but fell back quite a bit in in Q3. Don't have October data yet for total consumption.
This must be a great time to be an economist. We ended Bush and Obama's austerity with a big tax cut in 2017 and now we are having a pile of stimulus spending. It's a natural experiment in economic multipliers. I know COVID makes things a little more complicated, but we didn't see any signs of economic growth, like rising inflation, after the tax cut. If anything, the economic trend continued unchanged. Then came a lot of fiscal spending, dumping a pile of money into the hands of people who rarely had more than two cents to rub together. Now, we have all signs of growth: hiring, quits, inflation.
I'm sure some economist somewhere is doing the research.
True.
Tax cuts for the wealthy seemed to have stimulated the stock market.
Stimulus to the rest of the people circulates through the economy.
Well, I did get a new laptop and finally got external drive for backup (finally), and USB sticks for recovery. And a new phone early on too (old one was still 3G). Yes Win11 automatically encrypts your hard drive (and yes, if you need an access code, you'll have to log in to your Microsoft account).
But recently, not that much. A little more food shopping, less take out. I'll need to go shopping for clothes--I've avoided department stores for the most part. No major purchases either.
Excess spending? By whom and on what? The devil will be in the details. Is it working poor being able to buy more essentials for themselves, the middle class splurging a bit, or those that have getting more?
While reading through comments on KD’s last inflation post, it occurred to me that I hadn’t seen any headlines about business inventories. So I went looking:
https://fred.stlouisfed.org/series/RETAILIMSA
Huh. So, despite the supply-chain issues, despite the surge in retail sales, inventories are only slightly down. Are they including all the stuff in those ships anchored off the ports of LA and Long Beach?
@Ken
Thats interesting. But it is also retail inventories which normally ramp up this time of year for holiday shopping
There are still shortages n store shelves. For instance, my daughter in Mass reports that her local WalMart is out of a lot of stuff, and grocers are too. Yet, where I live in NC shelves are mostly full. It's an odd situation
I heard on Marketplace this bit:
https://www.marketplace.org/2021/11/16/inflation-is-hiding-within-retail-sales-spikes/
"In terms of retail sales, I didn’t buy more, I just paid more for it. This dynamic is driving about half the increase in retail sales right now, as retail sales are reported in nominal dollars, which doesn’t account for the effect of rising prices on those sales numbers."
So, some of the increased spending is actually increased prices being reported as sales.
Irrelevant. So real sales were up .8%. That is excessive consider the stimulus driven ramp in January and March.