The U.S. economy is 70% driven by consumer spending. When consumers stop spending the economy shrinks, it is that simple. The U.S. Dept of Commerce has released the May retail sales [pdf DATA HERE], showing a 0.3% drop in retail sales for the month. If you are interested in details, look at Table-2.
The critical point to remember is this sentence extracted from CNBC, “the numbers are not adjusted for inflation, which increased 1% for the month on the headline number and 0.6% excluding food and energy.” Everyone ignores this point, and every MSM economist pretends not to know it.
Retail sales -as measured in units purchased- have been in a contracting position since June of 2021. When the current data shows a drop of -0.3% in May, the actual drop in retail sales is much, much greater. The dept of commerce calculates retail sales in dollars. When prices are 20% higher and sales are low, retailers are selling less stuff (less units) at higher prices. This has been the reality of our economy for several months. This is also why productivity has been declining for more than a year.
If you take the 8.6% inflation rate (far understated) and an aggregate drop in sales of 0.3% (again, far understated as a measure of inflation), that means consumers are spending limited incomes on critical or essential purchases like housing, food, fuel and energy. Consumers are not purchasing durable goods; people are hunkering down.
Yearly retail sales (May ’21 compared to May ’22) are +8.1%. However, yearly retail inflation for the same period is +8.6%. Again, reflecting that less stuff is being purchased inside the economy at higher prices. If the commerce dept was measuring actual units being purchased, we would be seeing massive drops in sales.
(Via CNBC) – […] Advance retail and food service spending fell 0.3% for the month, below the Dow Jones estimate for a 0.1% gain. Excluding autos, sales were up 0.5%, which fell short of expectations for a 0.8% increase.
The numbers are not adjusted for inflation, which increased 1% for the month on the headline number and 0.6% excluding food and energy.
Sales were well below the pace in April, which posted a downwardly revised 0.7% increase from the initial 0.9% estimate.
Spending for the month declined even though sales at gas stations increased 4% due to fuel prices that scaled new heights, with regular unleaded hitting $4.43 a gallon in May and now running around $5. That growth was offset by a 3.5% decline at motor vehicle and parts dealers.
Miscellaneous store retailers saw a 1.1% drop in sales, while online stores posted a 1% decline. Bars and restaurants registered a 0.7% increase, part of a broader trend that has seen spending gradually shift from goods back to services.
On a yearly basis, sales were still up 8.1% as spending, combined with higher prices, has put a floor under the numbers. Consumers have been resilient through the inflation wave, using savings to compensate for the higher costs. (read more)
The people within the economic bureaucracy, that are aligned with the political ideology of the Biden administration, are going to lie on the second quarter statistics in order to protect the administration. The Q2 data is going to be heavily manipulated by the Bureau of Labor and Statistics, Bureau of Economic Analysis, Dept of Labor, Dept of Transportation and Dept of Commerce in order to hide the second quarter results.
Import data will be manipulated to help hide the GDP contraction. The rates of inflation within the economy will be manipulated downward in order to help hide the GDP contraction. All of the agencies aligned within government will manipulate the data in order to avoid a Q2 contraction which, when added to the Q1 contraction, would mean we are in a factual recession.
We are in an abusive relationship with our own government.
All on purpose.
This is all intentional, all on purpose, and that’s the main thing to keep in mind. Those conservative pundits, and they are legion, who keep saying, “incompetence, failed policies” are not helping. In fact, the Biden Administration is by far the most competent in American history, and its policy of remorseless, satanic war on the American people is succeeding beyond their wildest fantasies. They mean to destroy us and they are getting the job done.
For one thing, no one would ever have imagined that they could get this far with establishing the Green New Deal and driving internal combustion engines out of the market. No one would have thought that they could bring in 30 million illegals in just four years, but they’re going to get close to that mark as well.
only problem is that once the illegals get legal they migrate to the republican party.
personally i don’t think they are half as competent as you do. i think they thought ukraine and sanctions would weaken putin. in fact the full manifestation of the ukraine war on all its fronts will weaken the deep state(s) as nothing else in history has done so far.
Some do. Their percentage of people who fall for propaganda isn’t any better than the rest of america.
One of the best assessments I have read, ever. To the point and 100%
You called it. This is not bumbling incompetence. This is all by design.
That dementia addled old fool is revealing his tyrannical soul … he seems to think it’s a command driven economy … he’s destroying it … his first day in office he started by undoing everything done by Trump and now he’s refusing to accept responsibility for the mess he made.
Looking back in history Baked Potato Joe has always been a corrupt, fool that leaned which ever way the political wind was blowing. Remember all the plagiarism in his speeches, his “appropriation” of other people’s lives, continuously spewing stupid statements, etc. Democrats of years ago wouldn’t even vote for this fool on a national level until the “one” Obama drug him across the finish line for his VP.
Now a fool with dementia, Biden is a useful idiot, hologram patsy for the Maoist Obama cabal that is behind all this economic chaos. Think Susan Rice, Val Jarrett, Anita Dunn, Jenifer Granholm, Samantha Powers, etc.
Joe is the throw away tool, fool, just in case the Cloward Piven Communist Maoist strategy fails (again) so none of the anger and disastrous results rubs off on “the one”and his cabal. If the Democrats get steam rolled because of “Biden’s” policies , then Obama will tell his loyal, robotic sycophants that he told them “Never under estimate Joe’s ability to F it up”.
Just how do they keep getting re-elected? Four decades of the big lie! There is only one explanation, voter fraud! Couinting of votes taking so much time, finding all these votes in the trunk of a car, changing the demographics of the vote, the MSM lying through their teeth. The only way left for the Left is to eliminate voting. America has seen enough of this charade called Democrat! I noticed that they got smart (Dems) and took away the one lever vote in the Republican votes. Now I must go through each level to vote individually, oh how convenient they removed the R and D from the candidates so you must now know ahead of time who is who on the ticket!
“The dementia addled old fool“ is in control of nothing. You need to pull back the curtain and look beyond the puppet. Cast the blame on all those anti-humanity entities who are truly responsible for this chaos and destruction.
Hope all those suburban mothers are happy with their choice
Wait till there’s a shortage in box wine! Then they will feel it. 😂😑
Perfect^^^^^
Forbes: Talk of Peril in California’s Napa Valley.
No formula?
No tampons?
What’s a suburban soccer mom to do?
No vacation this year, that’ll get them in a stew!
But – hey! – no more mean tweets
Right?
Underscoring that we, ordinary people around the globe, are all in this together, today I visited Moscow to see how things for Russians were going. Not really, literally, but virtually, here wandering a supermarket with a local Muscovite.
Checking the prices is fun; one might even think, wow, those are reasonable, but let’s not forget the median income of ordinary Russians. Most poignantly, note the size and selection of the store and the dearth of customers.
One can view numerous other videos from this ordinary person as a window to reality in parts of Russia today, and compare to similar citizen reports in other countries around the world, and what we know about home here.
Outside, as I type this, I hear the garbage truck banging away picking up the neighbor’s trash. I haven’t had trash service since 2020. Crazy expensive for rural service, 15 bucks a week when I finally said enough is enough.
Anyway, video below, about 18 minutes….
How do we break through the fog in order to detect this manipulation?
Anyone who has been reading Sundance’s astute analysis over the last 1.5 years has had ample time to prepare for the worst that’s yet to come. More economic hardship on the way, and more people waking up to the real cause of it. Hardly anyone thinks this someone else’s fault other than our own Govt.
The Fed’s gonna find out that interest-rate-hikes won’t put a dent in this current inflation-stagflation-shrinkflation
Only part of the current inflation is demand-driven (too many dollars chasing too few goods)
The other part – I’ll wager the MAIN part – is structural
By that I mean that much of the price increases in goods are driven by the intentional attack on energy
… raising costs at production level (farming, ingredients, transportation of fertilizer and ingredients, etc)
… and adding to the cost of shipping goods, once produced
Interest-rate-hikes won’t touch those aspects of the economy
They’ll just punish people with variable-rate mortgages, new mortgages and car loans, credit-card debt, businesses who need to borrow, and on and on
ZeroHedge used the word “unexpectedly” in their headline. If it surprised them, they were the only ones.
Isn’t that the truth–we are saturated in deception, surrounded by those who are deceived and deceiving.
Per Sundance’s outstanding threads about all the “pretending” that’s going on, here we have a continuation of the game.
They are pretending we’re stupid, when at this point we are probably the smartest people in the room. All these over credentialed and under educated (hat tip Mark Steyn) morons in charge of our economy still have no idea we as consumers are the fuel that keeps it running.
Speaking of pretending, the Fed’s HISTORIC increase of 75 basis points shows us all they have declared war on inflation.
I know, Levi, you know, heck everyone knows this is just a nod that they must “do something” to rein inflation in…when it is nothing of the sort. And up those price go some more. Even their end of the year outlook for rises (2022, 2023, and 2024) is unserious…if they ARE interested in reining it in. Which they aren’t.
“over credentialed and under educated,” aka, educated fools.
Another way of putting it. Exactly right. I’ve always admire d Mark’s clever use of language. He is The Master.
For 416 weeks, 8 years, under O’Commie, they used the “unexpected” excuse. As Rush used to scream, at what point do you get fed up with unexpected results, and fire the forecasters?
It was unexpected outcomes for 416 weeks under the Chicago, O’Commie regimes.
Nobody got fired for being wrong every minute, every hour, every day, every quarter, every year. This went on for 8 years.
Does anyone think these selfish bastards are listening to US at all?
There might be some…but I think that number is decreasing daily.
The left will do everything possible to avoid the “recession” word. Deep State will mangle all the statistics to the breaking point. It will be a repeat of their approach to inflation.
The problem is recession is tied directly to inflation. The more things cost, the less people can afford to buy and the more they fear they need to cut back.
Ever since last Christmas when the “black Friday” spending on gifts never materialized, recession was probably impossible to avoid. The deliberate sabotage of the economy since then is simply going to make it deeper and longer lasting. The perfect storm of massive debt thrown in means the only possible government solution (historically proven) won’t even be considered. And that is massive spending reductions and rollbacks of all government suppression (taxes/regulations) of economic activity.
au contraire….”recession” is tied directly to the GDP….formal definition is 2 consecutive quarters of NEGATIVE GDP…..they doctored the numbers from the final quarter of 2021 meaning we are ALREADY in a recession but the numbers at the end of this month will publicly declare the 1st 2 quarters of this year qualify us as in a recession
I feel sorry for anybody trying to pay off debt in this economy. Debt should be avoided at all costs, because it is a burden in the best of times, and absolutely devastating in the worst.
Spend some time calculating corporate debt today. It’s breathtaking. The business world runs on debt, a marked departure from practices a few decades ago and most markedly a century ago.
Why is business debt an accepted practice but personal debt is to be avoided? I know, a rhetorical question. We can look to the last crash, when businesses failed right and left, bankruptcies exploded and the government did what, bailed out big business on the taxpayer dime while principals walked away.
That’s what America is. That’s what its humans are. What happens next is what it is. I’m good with it.
Debt has been so cheap it is like free money for businesses. Now, the rates will start to kick up and they will have to start paying that higher interest. Many businesses operate on very thin margins. Increase borrowing costs, reduce unit sales, and inflate costs will result in a lot of business failures on top of the Covid lock down induced failures. This is going to be a very rough time for businesses and businesses are the ones that write payroll checks and payroll checks have taxes taken from them. It is going to be a multidimensional failure.
I owe Bob $30,000 so I stay awake at night wondering how I’m going to be able to pay him back.
I owe Bob $30,000,000. Now Bob is the one that stays awake all night wondering if I will be able to pay him back.
Money should only be loaned to people you never want to see again. It’s like paying them to go away.
That’s particularly true for family members! 😂
depends on the interest rate and the inflation rate and what the debt buys. certainly even now a fixed mortgage on residential or agricultural (not commercial) real estate might make sense since the real interest rate is below zero and the possibility of high inflation is significant.
but i agree with you in all cases if the debt is to finance consumption.
“The U.S. economy is 70% driven by consumer spending”…I
Indeed. And this crew is hell bent on making us a post voter, post consumer train wreck. 😒
Keep your money in your pockets for now. Retailers will have excess inventory on certain items later this year. There will be some deals to be had.
Russia is a bit ahead of us, with the Covid mess and the western sanctions. Stocks are plentiful, prices are often discounted but it appears the buyers are nowhere to be seen. As inflation ratchets up here, liquid assets like dollars lose value so even with prices being discounted, net buying power is reduced.
I made a promise to myself when closing my business that no bottom feeder will ever set foot on the property again and leave alive. I hate bottom feeders. Opportunists, grifters, scum of the earth. Dealt with enough corporate bottom feeding scum in my business life. Life is war then you die. How true.
Yep, but also keep an eye out for a deal.
Retailers already are trying to reduce their inventories.
Also, remember if you have at least 30 days for a price adjustment.
Makes a big difference when it comes to big ticket items (TV or appliances). 😉
https://www.reuters.com/business/retail-consumer/target-return-soon-strong-profits-after-tackling-inventory-woes-analysts-2022-06-07/
Yes, and I wish that Sundance would push this point. Inventory on things that consumers can put off buying is already stacking up, and it is going to get a lot worse in the third quarter. Discounting will be the norm, but try not to wait until Black Friday. Once the kids go back to school, keep a sharp eye out.
On a related note, if you want less of something, tax it.
Biden threatens oil companies if they don’t raise production and lower gas costs. And he intends to put a 21% surtax on oil profits as the way to make them produce more.
https://ace.mu.nu/archives/399609.php
Biden Threatens Oil Companies That He Will Punish Them If They Don’t Start Producing More Oil, As His Policies Have Made It Impossible For Them to Do
“President Biden may resort to using emergency powers if American oil companies don’t increase output at their refineries, the president told oil CEOs in a series of letters Wednesday.
Biden’s statement blames oil companies for running “historically high profit margins” even as Americans experience surging gas prices.
Time to sell the oil stocks?
Sorta like Brandon telling the once president of Ukraine that he’s gonna withhold $1 billion in aid unless he fires the prosecutor investigating his son. Brandon knows his quid pro quos and threats. He just an old bully.
And they just keep lying, lying, lying.
We know they are lying. They know that we know they are lying. Yet they just continue to slap us in the face every single day with more lies.
If you ignored everything your read or heard from the MSM; just lived your life, raised your family; you would not have a problem figuring out what is really going on.
Before this mess ends, even the morons are going to feel the pain and they will not hide their misery.
This will get real interesting as the summer heat bears down on us all.
“…as the summer heat bears down…”
Already looking like the hottest June in history here in southern OH. Next week is being forecast to be hotter than this one. Violent crime is off the charts, and worsening.
Cronkite, in a smaller country, had 20 million watching.
ABC and CBS and NBC combined do not draw 20 million now.
And their talking heads are paid $millions.
And the talking heads of CNN, that can’t draw 1 million, are paid $millions.
We accept the premise that the job of the news readers is to draw an audience.
I say no. Their job is something far more sinister..
Well, we all know that figures lie and liars figure, so government statistics are just more make work for the otherwise unemployable. You can’t pull the wool over the eyes of the people who manage inventory and purchasing for the Walmarts and Targets of this world, and it is unlikely in the extreme that anyone who shops at a grocery store or pumps gas is going to be dazzled by this BS.
We have been in an abusive relationship for the last 15 years — at least.
Just that the abuse is ramping up unabated now.
Factual recession. And we can be assured when/if GOPricks win in November, there will be a recession proclaimed to put the blame on them.
Mel K has done a very deep dive and thorough analysis on all the connections for how they are driving “us” toward their end goal. Connections, connections, connections:
https://theinfowar.tv/watch?id=62aa081cad8c13221d33254a‘
Revolving credit debt rose 19.6%. Outstanding is $1.103Trillion, balances reached $841Billion as of June 7 release.
A rising Dollar is not good for emerging markets, their debts explode.
your CC companies are going to raise the interest on your CC’s if they haven’t already.
https://www.federalreserve.gov/releases/g19/current/
people need to understand that the Fed is trapped. Everything in this financial world is connected, a higher US dollar means any country who borrowed at lower interest rates, are in a world of hurt. With higher interest rates, It costs them more to service there debts.
Remember those 2/1, 3/1 and 5/1 arm deals for housing? What happened?
Dollar up = bad, Interest rates up = bad
The Fed sees only the USA inflation without considering what happens around the globe. You can’t win for losing!
Higher rates, cost the government more to service the interest payment on our own debt. Politicians are beyond ignorant and I don’t care what party the belong too.
Good news everyone!
Once they finish burning down all the food manufacturing plants… we can eat LEGO’s!
Is this for Biden’s “Build Back Better” program?
“Downwardly revised”. Haven’t heard that phrase in a while! Like since 2008-2016, “the good old days.”. (Cue the theme song from “All in the Family” a bit before even those times but appropriate it seems-again).
Didn’t need no welfare state
Everybody pulled their weight
Gee, our old LaSalle ran great…………..
Besides driving 70% of the US Economy, US Consumer spending is also estimated to be driving 30-40% of the GLOBAL Economy.
US Government induced economic disaster spreads well beyond US Borders.
The majority of US Consumer Imports are GDP Driving Products, that are considered discretionary spending.
it is why EVERYONE wants a presence in the US market….you can do well without it you can do extremely well with it
An important point. This will inflict more damage on the Chinese economy, which is already reeling under the weight of a collapsing real estate market, and now a rapidly spreading loss of confidence in the banks = bank runs. In the past, many leaders have started wars abroad to relieve the pressure at home. If US orders for durable goods decline far enough in the third quarter, look for the invasion of Taiwan to become a real threat.
Consumer spending is totally driven by credit. People have bought so much crap on credit they are now, or soon will be, caught in an economic squeeze in an effort to service their loans while trying to afford to live in this inflationary environment. The trillions in consumer credit are NOT manageable.
The economic crisis of 2008 was NEVER resolved. The FED printed trillions of dollars and bought the bad loans the banks had incurred. These loans are still on their books! What’s the old saying about chickens coming home to roost? Today the FED raised the discount rate by 75 basis points. The biggest rate hike in at least 40 years! It’s an outright admission of the severe gravity of a VERY dire situation.
Stand by. The next six months should be quite interesting.
If we keep moving the goal posts we can turn 20% inflation into negative inflation.
Next the white house will claim that the grocery store tags have disinformation.
How does the multi-millionaire ensure he can survive through the hardest of times?
He becomes a billionaire.
The ultra-rich are trying (have succeeded?) to place a river of money between them and us, a river that cannot be bridged.
In recent years, savings accounts and bonds have been sucker bets, made only by the middle-class or the timid.
The very rich have been in the stock market, and made a killing. Now? The stock market is no longer a good bet. Has the bridge been removed, or just collapsed?
Neo-feudalism describes the yearning of so many rich people for a world of poor people ruled by a few rich. The welfare state supplies a mechanism of control, far more effective than expelling serfs from their small plot. Justin Trudeau decided he had the right to seize the property of unruly serfs. Now there’s feudalism!
race to November….
They have so far closed 11 refineries and they have not built any new refineries for over 50 years. We have a lawless administration.
Not a lawless administration – but a suicidal administration.
Refineries routinely close for maintenance, and it’s common to use that as an excuse to usher in some panic price spikes. Never let a crisis, real or imagined, go to waste.
Every time I hear an economic report from the Regime, it is preceded by my hearing Steven Tyler saying “Going DOWN”.
You’ll notice, as the plane descends faster the death spiral will tighten.
I love how the market went up today because the Fed raised rates 75 points…as if that is magically going to reduce the incoming inflation already guaranteed in the next quarter or two of goods deliveries. These bozos remind me of the clowns in the clown car at Barnum&Bailey. Oh that’s right, we’ll just tell businesses they can’t charge more because they’re “greedy” while the truly greedy ones devise their next plate spinning scheme.
My take on todays gain is that the market had already baked into it the 75 basis point increase. Todays positive market was due to forces trying to prevent the market from falling below 30,000. 29,999 would be too hard for the FJB regime to brush over, the optics is too great.
Disgusted
No money equals no sales.
Of course the idiots in DC are sending another BILLION to Ukraine of taxpayer $$$ while the American Citizens are suffering because of their incompetence and desire to destroy America.
Rhodesian South African here. It is interesting to see the West now finally having the media lies turned on them that were turned on us to make the world hate us and rob us of our countries. I feel sorry for you but at the same time it is funny to see so many people wake up to facts I grew up with. Not funny in a humorous way but in a weird way.
I am feeling desperate. I’m a business owner and it’s so
grim.