The U.S. Census Department releases retail sales data today showing a strong contraction in consumer spending for July [MSM LINK]. The out-of-touch financial pundits were looking for a 0.3% decline; however, the drop was four times greater with a contraction of 1.1% in spending.
“The slide in retail sales comes after Friday’s preliminary consumer sentiment report from the University of Michigan showed one of the largest drops on record, leading some strategists and economists to warn of downside risk to the sales data.” (link)
This should not be unexpected for those who read here. Massive price inflation on essential goods is eating up wages. Food, fuel and energy price increases are changing consumer spending habits. Non-essential purchases have stopped….. they haven’t slowed, they have stopped. ←Emphasize this because it is not showing up yet in the data lag.
The data reflects that auto sales were the primary contributor to the decline in spending (-4.3%). This should make sense to people because auto purchases are the largest general consumer purchase outside of home purchasing.
When purchase decisions are made by families; and food and fuel prices are skyrocketing; replacing a vehicle is not essential. Auto sales are a key indicator of consumer confidence and income.
Overall inflation is the primary driver. Real wages are declining (wages – inflation), and disposable income is dropping quickly. Americans need to start talking very deliberately about what is about to happen. CTH predicted this and has been walking through the visible outcomes as each set of new data surfaces {SEARCH BOX}. Nothing happening right now is unforeseen or not easily understandable.
There is a cascading effect that happens within the economy. Income shrinks, then spending shrinks, then employment shrinks and work hours reduce. It is an unavoidable outcome inside the middle-class economy.
Two-thirds of our national economy (GDP) is dependent on middle-class consumer spending. Any impact to that spending cornerstone triggers downstream consequences. Large ticket items (like cars) are the first to drop. [Car sales have declined 10.4% from their peak in April.] Luxury goods in general come next.
Wage-earners, families around the table, husbands and wives, start making decisions on finances based on income outlays. The roof over your head is the priority; then comes food, and the prices are rising; then gasoline, and again rising prices; finally facilitating expenses for work and school.
I said in June, at a macro level home prices had reached their peak (last two weeks of May, first two weeks of June was apex). Obviously, there are some geographic home value increases still happening as COVID related regional issues and work opportunities are shifting populations. There is also a lag and ripple effect that takes time to work through the economy. The macro-apex will not be visible until next year.
People go where the work is, and the work is in the freedom zones (red states/regions). Population shifts keep some area home prices increasing. However, on a national macro-level the apex has been reached. People cannot afford higher mortgage payments and simultaneously deal with massive inflation on essential purchases.
Economic pressure works to the benefit of the command and control authority who wish to force vaccinations upon people. The fear of losing a job becomes more of an issue for people when income security is threatened and they see food prices rising so quickly. It is unnerving, unsettling and for paycheck-to-paycheck families extremely stressful. This creates leverage for corporations to require vaccinations for employment. I wish I had the answers; alas, I do not.
Bottom line is… Depending on your personal situation, prepare yourself now for prices to continue rising on both consumable and durable goods. In the longer term, specifically due to a lack of purchasing, durable good prices will level and eventually drop. Less people buying stuff makes prices drop as competition triggers and businesses selling durable goods look to survive. Unfortunately at that point we are usually headed to a recession.
The downside for a drop in durable good purchasing is the workforce behind the manufacturing, distribution and sale of those goods are at risk of losing employment. Again, a natural outcome. For the auto-industry, and heavy industrial manufacturing, this is the time of year when retooling is taking place and some manufacturing and production lines are closed. However, when they return to production those companies might be shocked to find fewer purchase orders for the goods they produce.
Employment is currently stable (especially in the freedom zones); but we should watch for continued signs of consumer spending contraction. Any employment contraction will be made worse by the millions of illegal aliens now purposefully permitted to enter our nation.
Keep in mind, the Federal Government is pumping money into their command and control economy. This short-sighted (I would say purposeful and ideological) monetary and economic policy is contributing to massive inflation.
Inflation puts pressure on incomes and savings…. which puts demands on government to support income losses…. which leads to govt pumping more money. This is the dependency and welfare cycle that seems intentionally being deployed by Biden and the socialists behind him.
FORBES – “Consumers spent less last month than economists had expected, buying fewer things online and holding off on car purchases, the Census Bureau reported Tuesday morning, following Friday’s report of “a stunning loss of confidence”
[…]Consumers spent 1.1% less in July than June, more than the 0.3% decline economists cited by MarketWatch had been expecting, after increasing 0.7% the previous month. The decline was driven by the lack of motor vehicle sales, which fell 4.3%. Nonstore retailers, which includes online shopping, fell 3.1%” (link)
I think we’re hurtling toward “stagflation”.
I remember the late 1970’s very well.
I was a broke grad student working 2 jobs and taking city buses and Greyhounds.
Rampant inflation created a staggering amount of economic stress in the national zeitgeist, thereby making its inexorable increase a self-fulfilling prophecy.
We were young marrieds in 1973 with a very small paycheck … always had some cash in our pocket as the majority of all staples were cheap – bread, milk & gas 50cents … then … overnight everything doubled except our paycheck – and we were broke.
I also remember. I was lucky enough to get a job out of high school. I paid my parents rent money, bought my own food, because they too were struggling.
The political class Marxist and other Marxist have been trying to destroy us for decades. We managed to hold them at bay on and off but as they’ve increased their numbers and power we’re now seeing the culmination of all they’ve implemented. Many of us thought that problems like you experienced in the 70’s were natural occurrences in any society when that was not the case. Some but not many knew these kind of problems were created not natural. Now we know that is true and we know who is to blame.
“The days of malaise”
Turn your thermostat down to 65 this winter and wear a JC sweater.
Speed limits reduced to 55 to save fuel.
Want a loan? 15-20% interest rate. The real estate market will go dead buried, turned to dust, and everybody who bought this year at the peak will be underwater faster than Auquaman riding Joebamas economy to the bottom of the ocean.
If you have some profit from the last few years in your retirement funds you might want to sell a bit and hold onto that cash profit for the buying opportunities headed our way.
And don’t forget, we’ll get “Government Cheese”.
It’s always the working class who pay the highest price for the DNC’s idiotic decisions and these particular idiots are just getting warmed up.
And never forget … the RNC, GOP & RINOS gave the house back to the RATS in 2018 … and helped them steal the 2020 election from President Trump and WeThePeople … the destruction is on them as everyone knows RATS only destroy.
What is amazing is that the occult sadist dems manage to get people to believe that everything is wonderful, that they are working for the middle class and what they do actually helps.
No more amazing than having convinced (apparently)a majority of our fellow citizens that there is a public health emergency, based solely on a virus that’s so weak they have to cook the “pandemic” statistics! That accomplishment alone empowers the “Puppet Masters” with total control over their opposition! We can talk all we want about mid-term elections and “President DeSantis” in 2024 but all elections are forever corrupted! We have fellow citizens advocating barring the non-vaccinated from driving/travel, food purchasing and the right to work! If a majority of our fellow citizens can be so easily convinced to fear their fellow citizens over a statistically proven bad flu virus, then I see that as game, set, match! Hope I’m wrong but……….
Retiree’s are not faring too well either.
Just announced the Biden communist administration has just granted a 25% bigger car for everybody, paid for by the government. At least that is if you have a social score of at least 500 points. Show your card when applying. Cheers comrades.
The society needs a certain amount of good & services to stay in price equilibrium. If you add non-productive workers and recipients they’re not adding anything; you have the same amount of goods & services with more people demanding them. Then when you compound this with the fact that their government job probably makes things more difficult to produce you can start to see why things become much more expensive.
I say start because in a massive society you’re going to have the snowballing effects of market momentum and psychology to contend with also. Plus synergistic effects like adding to the Money Supply. I can’t imagine anything more Inflationary than a government using Monetary Policy to fight its own people tooth & nail.
But the commies won’t feel a thing. As usual.
https://www.breitbart.com/tech/2021/08/17/socialist-who-said-usa-deserved-9-11-buys-2-7m-west-hollywood-home/
It always amazes me how the socialists and communists are the ones with the money. Same with the terrorists. Always. They trash capitalism and freedom yet they are filthy rich from capitalism and freedom.
That Cenk Uyger is an evil, vile horribly sick twisted perverted person.
People aren’t buying vehicles where I live because there are none to buy! Few choices of new cars on the lots are due to the lack of chips in the key FOBs. China is not shipping the chips. GM is stashing new vehicles (won’t run without the chips) at the now closed Kentucky Speedway! In field, outfield…everywhere you look are brand new cars! Can’t buy a new GMC truck here anyway. At least now one you want. We may certainly be experiencing inflation in all goods and services but new car and truck sales lag for other reasons also.!
You sound like a used car salesman. Maybe people aren’t buying NEW vehicles because they are too dang expensive.
No, he’s right. See the link I posted above.
Stop by a new car dealer and see for yourself. Near me, I stopped in 4 dealerships for a couple of different makes. There was one sales person at each. One of them didn’t have enough people there for me to test drive a car (on a Saturday!). They said they would call me in a few days, but never did.
What’s the real reason for this chip shortage? If all these auto companies CEO’s signed off on canceling chip orders during COVID and now are this flat-footed, why aren’t they fired already?
Because it is a lie… The automakers knew a slowdown was coming and this is their method of faking the reason.
The only chips I see out of stock are my potato chips at the store thanks the EBT free for all.
Both the used and new car market are nuts now. Due to the chip shortage, dealers have maybe 10% of their normal inventory. Manufacturers are shipping them vehicles with non-essential systems not installed (infotainment and convenience systems) and hoping to retrofit the vehicles in a year or so in hopes of still being able to sell some vehicles.
I was looking at new cars, and the sticker on a car I looked at said the price was MSRP + $5000 market adjustment.
On the upside if you’re selling a used car, prices are up like 50%.
Here’s the link to the story.
https://www.whas11.com/video/news/local/chip-shortage-causes-ford-trucks-to-pile-up-in-lot-near-i-71/417-3cdbf7cd-3c7e-42bb-80c1-8365ac4134cd
Ohh, those $50,000- $80,000 ford trucks LOL. Yeah let’s blame the chips and not the price.
The only thing we have to fear is fear itself. We can all be independent if we chose to be. You don’t really need all the crap that you have been programmed to think you need. I have been in a war, jumped from airplanes and weathered several hurricanes. I was once addicted to drugs and for a while an alcoholic, but never went to rehab or AA and I never blamed anyone but myself for those issues. I don’t have a college degree, but have always worked. I retired 18 years ago and even though I have been at times eligible, have never taken food stamps, welfare, unemployment or any type of government assistance. My family has never been hungry. I am debt free and have been for years, my home is paid for, thanks to the tenacity and grit of the love of my life, my wife. I haven’t bought a new car since 1986 and am currently driving a 15 year old soccer mom van that I bought used in the local Walmart parking lot 5 years ago for $2800. I am old, but I am not afraid. I see my country being laid waste to by a government and society gone completely, stark raving, mad and I know that as an old guy, there is not a lot I can do about it. I make the obligatory calls and message my Reps., both Federal and State, but I am smart enough to know that it has no effect whatsoever and only makes me feel better. I gave up Facebook, Twitter and Instagram, even gave up all professional sports as a protest of the actions of those privileged bastards that chose to disrespect America. I vote. I pay taxes. I have witnessed the “end of the world as we know” it several times and yet here we are, still standing. I dare any leftie commie traitor to step on my property, even if they say they are here to help. I am old, but not in the least afraid. So take heart America, we will survive this, in one form or another. If they burn it all down, we will rebuild it from the ashes….we have to, because no one is coming to save us.
I would relish the opportunity to rebuild in my lifetime.
Hear, hear!
Have you taken up gardening to save a few dollars? Cooking your own food from scratch also saves a bunch, and it tastes better once you learn.
Here is an old school meal I got at lunchtime working the local farms back in the 60’s.
Meat with some bone browned in a dutch oven, some onions and carrots thrown in with salt and pepper, and some liquid halfway up your meat. Lid on and in the oven at 325 for 2 and a half hours.
Remove the meat and veggies, thicken the liquid and serve with mashed potatoes, white bread, and corn.
It will get you through the hard times coming.
The useless business site CNBC.com attributes the drop in consumer spending to…the Delta Variant!
Gee – what CAN’T the delta variant do?
Saw an ad today whose selling point was floating the user twenty bucks to tide them over until their paycheck arrived.
I sat there thinking to myself just how far down the financial tubes would you have to be for that ad to be a selling point?
This inflation is going to push a lot of people right over the financial edge. They’ve probably already got a cash flow problem and inflation is only going to make that worse. I’m guessing it will not occur to them to limit their purchases to essential items only. It will only get worse.
50% of America is sitting around all year waiting for their tax refunds, which the Democrats just started paying out monthly payments now. That’s how bad this country is…. How do you make money from Broke indebted people? YOU DON’T…. unless you sell food, or gas.
The Country’s heading into its second only era of economic Stagflation, a Democratic specialty. This is going to be rough but like all hardships in life it’s also going to be a blessing in disguise. It’s going to paralyze the Democrats ability to Print money and coopt countries, organizations, and people. We’re not a little banana republic – China’s not going to be able to come along and subsidize their operations.
See, you can’t Print your way out of stagflation, that’s the source of the problem. Biden thinks he can (and all the dumbass bureaucrats) but they can’t (gone to the well to many times). Like I said it’s going to be rough, he’s going to give us a Crash we can’t get out of utilizing Monetary Policy. Another President might be able to utilize some sort of Productivity oriented Work-Fare but mostly it’s going to have to work itself out naturally according to all the Laws of Economics.
That’s where he’s taking the democratic party, Oblivion. And after Stealing the Election, it’s tough to describe how despised that Entire Generation is going to be.
The complete opposite of their parents. Pure Scum.
There are commercials by the Xiden administration that tout the American Jobs and Families Plan. It claims the middle class is booming financially because of the Child Tax Credit, and a booming economy overall because tax loopholes will be closed for the wealthy and corporations.
Another commercial shows a family who voted for Trump in 2016. They now support Xiden because Trump handled Covid horribly and they lost their business because of Trump…… but thanks to the American Jobs and Families Plan, they are now in great financial shape and glad they voted Xiden in 2021.
Two commercials are pushing green energy and climate change. Thanks to Xiden and Dems, green energy jobs are being created in great numbers. Also the infrastructure bill is creating even more jobs and creating a booming economy. One of these commercials uses an Air Force veteran who praises the Dems for green energy opportunities.
When Pres. Trump was in office, I never saw any advertisement about what good things he did for the country……financially, medically, environmentally, etc. Not one.
NOTHING THE DEMONRATS DO IS BY MISTAKE, their goal is to crush America and Americans, watch for the increased attempt to grab guns. They ve got us locked down, pouring sick illegals into the country ( make sure all work done for you is done by legal contractors), crushing the economy by flooding the markets with money and running away from our commitments emboldening our enemies. watch for china to move on Taiwan and the usa do nothing
That is a perfect outline of their plans. The difference is now they don’t care who knows how evil and driven they are. Nothing is to extreme to demand and coerce others into accepting. Hate to tell em but they may have peaked to soon. I for one am no longer surprised by their evil but I am surprised by the fact we still have more who oppose them and will fight to stop them even after all this time. Can’t say I can say the same for Britain, Australia or New Zealand. They’ve given in totally…at least for the time being.
I wonder how much of the apparent capitulation by the citizenry in “Britain, Australia and New Zealand” is because they’ve been disarmed by their governments?