Move along, move along folks… please do not pay attention to the fire raging downtown, the suburbs are so nice this time of year… move along folks, look shiny Ukraine thing over there…
When retail sales are calculated, they are calculated in dollars. Any recorded increase in retail sales that does not exceed the price increases in those items is factually reflecting a drop in units sold.
Ex. – if you sell 300 items at $1.00 each, you have $300 in sales. If you sell 250 items at $1.25 each, you have $312.50 in sales. Technically, you have a 4.1% increase in sales. However, you have sold 17% less items (50 units).
When you are selling less stuff, your business (economy) is contracting, not expanding. We have been in this contracting cycle (an actual production recession) since May/June of last year; however, the contraction has not been recognized because massive inflation is hiding it. That, my friends, is the painful truth and it spells big trouble ahead.
(AP) […] Retail sales increased 0.3% after registering a revised 4.9% jump from December to January, fueled by wage gains, solid hiring and more money in banking accounts, according to the Commerce Department. January’s increase was the biggest jump in spending since last March, when American households received a final federal stimulus check of $1,400.
Business at furniture and home furnishing stores fell 1% in February, while sales at consumer electronics and appliance stores slipped 0.6%. General merchandise stores saw business down 0.2%, while online sales fell 3.7%. Restaurant sales rose 2.5% as shoppers shift more of their spending to services as the threat of COVID-19 fades. (read more)
Take the figures above and compare them to the sector inflation in February (Table-2, BLS Report) – Just sticking to what is above:
- Furniture prices rose 0.8% in Feb, total furniture sales dropped 1.0%
- Electronics and appliances rose around 1.8% in Feb, sales dropped 0.6%
- Online sales items rose in price around 0.5%, sales dropped 3.7%
.
What this reflects is an actual contraction much greater than the dollar drop in sales. In most cases the unit sales dropped at a rate six times the price difference. If you reverse engineer the math, the average is approximately a 15% reduction in durable good units purchased.
In a very macro perspective, that means the U.S. economy overall has approximately 15% too much labor in the sectors associated with the categories of goods that people have stopped purchasing. This means people working in the durable goods sector, production, assembly, transportation, delivery and retail sales staff, are about to get laid off work, RIF’d and downsized.
Math is math, and inflation clouds the realities of the economy.
Ordinary people are prioritizing spending and watching their wages get chewed up by higher prices for food, energy, fuel and housing. If you live in a predominantly working class or blue-collar area, when you start seeing contraction locally, you can be sure it will show up nationally.
Prepare for a long-duration recession, combined with increasingly costly energy costs.
However, do not distress yourself with dark imaginings. Instead, empower yourself. Take action today to evaluate your expenses and then ask how can I lower those expense costs by modifying my habits? Think strategically about convenience -vs- costs -vs- how much your own time is worth.
You may not need to modify anything. Or you may need to reevaluate priorities in order to help your kids or grandkids.
Be wise.
Be the hero for your family.
Be strong.
Be proactive.
Above all, be thankful to a loving God. No weapon formed against you shall prosper.
Stay humble in your expectations, stay connected to your stabilized core self, and embrace fellowship.
This too shall pass.
#FJB
You ain’t seen nuthin yet folks. it’s only just begun.
…..white lace and promises…..
Proof … that our Stock Market is manipulated and controlled by RAT Billionaires.
And gold keeps falling saying no inflation!/s
FK
Lets go Kevin!
You mean other than “The Narrative” and many people’s bank accounts collapsing. Of course you did.
Today, I talked to an equipment salesman who told me the inflation in the last three weeks in the price of building a new laser welder. Three weeks ago the price was $22,900. Today the price is $26,400. That higher price can only be guaranteed for a month because they have no idea what their inputs are going to cost next month. He also told me that it is getting difficult to get parts to repair anything.
That’s a smaller piece of equipment. Imagine if manufacturers have to replace machines that cost $100,000 or aren’t able to get parts to repair them.
This is another breakdown in our system. Not just the cost and availability of wheat, but the machines that turn the wheat into Wheat Thins. The machines used to make the packages and then to package them.
Yup. I work for a company selling industrial equipment. For high dollar jobs our manufacturers reserve the right to raise prices AFTER we place orders! They have never done that until recently. Sure tells me something about the market. How we are supposed to do business like that is insanity.
I didn’t realize that -yikes – AFTER orders are placed. That would be extremely hard on a manufacturer not to be able to know the final cost until the equipment is made. Who knows, in the future, if even smaller equipment manufacturers would have to do this regularly?
A skilled, precision machinist is worth his weight in gold on the repair end.
Same here. Price increases take effect immediately and apply to existing open orders!
I work in a medical lab, where some of our cancer testing instruments cost over $100,000 each. They’re all made in Japan because nobody makes anything like this in the US. Replacement parts are getting harder and harder to come by lately, with some repairs being delayed 2-3 weeks longer while we wait for the parts to slowly trickle through California.
In other words, be very very skeptical about what elected officials, government officials, the MSM, academia, the entertainment industry, the education establishment, big pharma, big banks, big finance, big business, and the billionaires telling you.
Why? Because there’s a very good chance they are shining you on. You know….they’re probably lying.
“Probably”….? They are no longer working for our benefit.
I’m long on ammo, though…and freeze dried food.
toilet paper, rice and pasta.
They’re buying tangible assets. That is why BlackRock et al are snarfing up homes like crazy. It’s a no lose situation for them. Even when the housing market goes bust they know they’ll be bailed like everybody but Lehman was in 2008.
Federal Reserve 0.25% interest rate increase will do nothing.
Inflation is a lot higher than the phony CPI of 7.9%.
Inflation is well above 25%. The price of everything from
food to gasoline is constantly going up.
Price is no longer Stable.
Filled up my car’s tank yesterday for $52.00. When Trump was in office to fill up the same vehicle cost $24.00.
That is over 100% increase. An inflation rate of 25% may be too low. This is going to get ugly!
Best post of the day! Thank you Sundance. Encouragement, positivity and faith in God is always in fashion and a reminder of how we should conduct ourselves.
what 59 sed thanks R.D.
When you do your taxes, you go through your bank and credit card statements. When you do that, you can keep a lookout for expenses to cut – especially expenses that are paid automatically. For example, do you have paid subscriptions to periodicals that you don’t read?
Also, check, your trash pails. Do you habitually throw away the same kind of thing? If so, then maybe you shouldn’t buy so much of that thing.
Already cut back. Just dropping DirectTV and heating without LP is costing someone $4500 bucks. LP has gone nuts! Filled last spring and still full. Bit more effort, but definitely paying off.
I use ‘renewable’ heat…trees. Good to have land–and a woodstove.
I will add, still have all the TV channels we typically watch…via internet TV. The system actually functions quite well for a fraction of satellite TV cost.
Even have OAN…cool.
Luckily, our electric co-op pricing is still a bargain.
Only problems now relate to $500 cost to fill my pickup. NOT cool.
#FJB and his Weimar Democrats.
I firmly believe, after Trump’s term, the only way this country will return to fiscal responsibility is for Democrats to have control of the Legislative and Executive branches of the Federal government and continue this insanity to the collapse of the government. Until then politicians and media will tear this country apart for their own benefit.
How will democrats bring fiscal responsibility? They’re leading the charge to destroy our economy. Nothing they do considers economics.
I believe, Daders, is talking about ripping the bandage off. Sadly it won’t work, since the Democrats would still be in charge.
Huh????🤔
Above all, be thankful to a loving God. No weapon formed against you shall prosper.”
A-MEN. If you want to know how all this turns out, read Revelations in your Bible. Don’t have a Bible? Stop by your local church and get one. Christ is your only hope and there was a time the vast majority in America believed that.
Since the majority of manufacturing is off-shore, if the US consumer continues to reign in spending this could also really hurt China, Mexico, etc.
Why do you wish to hurt Mexico? Explain in detail please! You should step on a rake!
It will be a modern combination of 70s stagflation and Obama Era lack of consumer confidence and lack of small business creation and expansion.
Look at all the online advertising and sales that are continually going on now.
This is the first true indication that we are headed to the scene of the crash.
My company’s sales have increased between 25-40% year over year and execs are crowing about how great we are, but nobody can answer my question about the actual number of units sold. I’m in Sales, and I see increased prices, not any real growth. Our customer base is mostly manufacturing, industrial, distribution and logistics. Price increase announcements from suppliers come almost daily. Many of our suppliers are not taking on new business due to supply problems.
Sundance, I love this post. All the depressing news but, yes, you are right…this too shall pass. We’re in for a rough ride but we’ll be ok. The problem is the lying and deceptive screwball administration we now have. Americans will grit their teeth and buck it up for any good cause but for this bs we’re gnashing our teeth and saying FJB.
It galls me that they so blatantly put forth such inane narratives and really think we’re stupid. “Cold anger” in my gut.
Can’t wait to see all on the government welfare screaming how the new prices are RACCCCist.
The govt will come to the rescue, & use inflation as an excuse to start the socialist universal basic income. CA is already considering sending a $400 check to it’s residents, to help with gas prices.
It’s a little disappointing to see ‘trust in God’ followed up with FJB. Without question, if more people embrace a Christlike attitude the corrosion in our culture will subside. But incivility is the realm of the left. We’ve got to be the adults in the room. Yes, we’ve got to push back, but let’s do it in ways that demonstrate our commitment to higher ideals.
I thought math is racist? I’m a bit surprised the left doesn’t start telling us that higher prices are racist, and retailers need to lower their prices to minorities.
I don’t think this Q&A with Chicago Fed president Charles Evans from March 2021 ever got the proper attention it deserved. He essentially disavows any use of monetary aggregates in the Fed’s creation of monetary policy (queued at 41:50)