Reliant on Retail — Joey B went on 60 Minutes this past weekend and had a hell of a lot to say, including that “the pandemic is over.”
But he also went back and forth with Scott Pelley on the monthly vs. yearly inflation debate, which I’m just so sick of hearing at this point.
Sure, it might be flat since last month, but the point is that people are paying 8%+ more than they were last year, which still hurts.
Anyway, aside from that interview, we also got data that showed retail sales ticked up in August. Combined with a still-tight labor market and allegedly flat inflation, it might sound like the economy is hunky dory.
Turns out most of that increase was due to higher vehicle prices, and when you take that part out, sales actually dipped slightly.
I like to compare consumer sentiment with household debt levels because they tend to go hand-in-hand. Credit card debt is on the rise as households try to preserve their lifestyles amid higher inflation and adds a darker backdrop to the strong retail numbers.
What could really wallop the consumer is a sharp economic slowdown combined with higher interest rates on credit card debt. If you’ve ever been caught in the whirlpool that is out-of-control CC debt, you know the struggle.
Like it or not, a huge portion of the domestic economy depends on strong retail numbers during the holidays.
The FedEx report last week already points to a muted holiday season, and heavier debt burdens could weigh on consumer spending even further.
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