**U.S. Retail Sales Jump 3.8% as Shoppers Shrug Off High Inflation** **Consumers spent broadly at the start of the year, but economists say higher prices are playing a bigger role** **by Harriet Torry, The Wall Street Journal, 2/16/2022**
**U.S. shoppers spent strongly at the start of the year with a surge in big-ticket and online purchases as inflation reached a 40-year high and the Omicron wave of Covid-19 started to recede.**
**Retail sales, a measure of spending at stores, online and restaurants, rose by a seasonally adjusted 3.8% in January from the prior month, the Commerce Department said Wednesday. ...**
**Unlike other economic-data reports produced by the U.S. government, retail sales aren’t adjusted for inflation. That means higher retail-sales figures can reflect higher prices rather than more purchases....manufacturing output rose slightly, by 0.2%, after falling in December...** [end quote]
The retail sales figures don’t include spending on services.
The headline looks bullish until you realize that consumer price inflation is running over 7%. If consumers expect inflation to keep rising (“entrenched expectations” in Fed jargon) they may buy big-ticket items earlier to lock in pricing.
The headline looks bullish until you realize that consumer price inflation is running over 7%. If consumers expect inflation to keep rising (“entrenched expectations” in Fed jargon) they may buy big-ticket items earlier to lock in pricing.
If CPI >7% and Spending is <4% increase…has spending even kept up with inflation?
Wendy says: If consumers expect inflation to keep rising (“entrenched expectations” in Fed jargon) they may buy big-ticket items earlier to lock in pricing.
This is precisely what’s happening, but, it’s not because they expect pricing to increase, it’s because they are worried they cannot get it.
People are buying more quantities and are pulling ahead opportunistically because they are afraid the product will not be there when they need it.
The preponderance of sky high pricing on Amazon.com for non traditional sellers (marketplace) with no returns are examples of resellers scalping those who did not find the last box or tub of product on the shelf after the last truck.
It happened with ammo in the past. It’s happening now for everything from industrial acid, to breakfast cereal to keto products of many stripe (zero calorie sodas, for this example), house paint and so many more.
It’s not just consumers. My company has recently gone on binges of buying our raw materials from big box stores just to keep the operations moving. We’re buying our supplier’s companies now instead of just waiting for a long overdue order to arrive! All this in the hope that we can better manage efficiency and job priority to keep our subsupply available.
We’re running over 20x our usual shortstocks. 50 SKUs are not available causes concern. Well over 1000? It’s a daily nightmare.
The headline looks bullish until you realize that consumer price inflation is running over 7%. If consumers expect inflation to keep rising (“entrenched expectations” in Fed jargon) they may buy big-ticket items earlier to lock in pricing.
Transitory inflation has a small effect on “U.S. Retail Sales Jump 3.8% as Shoppers Shrug Off High Inflation”. That is because transitory high inflation is in energy and food sectors. Other retail sectors do not see 7% inflation.