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Re-Fail Sales
You guys had one job…
And that was to go out and spend money…like a lot of it. But you didn’t, and now the economy (and your portfolio) will pay the price. Y’all out here saving money, smh, gotta contribute to the economy, apes.
Personally, me and my homies dropped a bunch of cash we don’t have on things we don’t need just to support the economy, and as a result, you can’t blame us for the poor performance of retail sales last month.
Y’all let retail sales dry up approximately -1.1% in December, aka the holiday season. In case it’s not obvious, that’s a key time of year for retailers like Target and Best Buy that rely on solid holiday numbers to drive their share price and fuel growth. Now, these firms don’t report earnings for a while, so we can only speculate, but let’s just say this isn’t exactly a good sign.
Moreover, retail sales for November were revised down at the same time, going from a decrease of -0.6% to a decrease of a full -1%. Wow, y’all really exploited those Black Friday deals, huh?
But this slowdown in retail sales is indicative of a larger and spookier trend. Falling endpoint sales is maybe the clearest possible sign of decreasing demand for goods among consumers. And that, of course, bleeds into things like the -1.2% drop observed in manufacturing production.
With consumer spending being roughly two-thirds of the U.S. GDP in any given year, you might be thinking, “yeah, we’re f*cked; better start building my bunker.” I wouldn’t blame you, but don’t go start digging in the backyard just yet.
Consumer spending includes a whole lot more than just retail spending; on the other side of the coin is service spending, which (conveniently) is expected to semi-make up for the retail’s downbad month.
For example, compared to a year ago, spending at food services and drinking establishments mooned 12.1%. Even after adjusting for December’s 6.5% YoY inflation, that’s some solid growth. I just can’t tell if it’s because grocery prices were so high that nobody wanted to cook or if consumers were so depressed about the economy that they chose to drink away their sorrows.
Regardless, we know one person who likes what he sees: JPow.
JPow has been on a demand destruction binge, kind of like Hannibal Lecter, but killing demand instead of real people. In his and the FOMC’s view, the U.S. economy has been operating past its economic output capacity, driving inflation and all your other problems. But even as this lousy data rolled in, Fed officials still came out clamoring for +5% rates before we can chill out.
How much demand destruction is enough? As pointed out by leading economist and poet Cardi B, affording the eggs I was gonna throw at my neighbor’s house is basically impossible now. When can we stop the madness, JPow?!
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