Disappointing US Data Has Stagflation Vibe
US retail sales rose far less than expected in November, data out Wednesday showed.
The 0.3% advance was less than half of the anticipated increase (figure below), and came in near the low end of the range.
At the margins, the tepid read on consumption may allay some fears that the Fed is falling further behind the curve with each passing week. In recent months, robust consumption despite rising prices was suggestive of an overheating economy, even as it seemed to argue against sentiment surve
I’m waiting till after Christmas to buy anything I may need. There’s a ton of fully marked-up stuff sitting on store shelves waiting to be bought — and more on the way as supply chains are slowly unclogged. Everything will be on sale post-holiday.
I still think that the likeliest scenario is that the consumer with his stymie checks was driving the inflation and, as excess savings get spent (US consumers clearly haven’t heard of saving for a rainy day), the inflation will normalize.
Assuming the supply sided bottlenecks are now mostly created by unusual demand levels rather than by COVID restrictions, it also seems unlikely we get stagflation.
So all said, I still expect inflation in 2022 to be way more manageable than now… and the Fed shouldn’t have to do too much.
+1
I guess I’m the only one that finds humor in this. 2 months ago the Fed was calling Stagflation 2.0 fears “overblown” and now here we are faced with the reality that oh crap maybe it’s true?? And the propaganda news networks have clearly done their job to brainwash enough people that stimulus checks are the problem and let’s blame the poor and blue collar workers for all of our financial problems forever. That narrative never goes out of style when you’re a billionaire and you control large swaths of media outlets. Meanwhile, barely reported on record breaking stock buybacks occurred at the corporate level last quarter while unemployment was growing (at record levels) and consumer prices went up for companies who were glad to take your extra cash for the stimulus check blamed inflation. I reiterate that we live in the dumbest time and the richest country in the world is only so financially and clearly not at all from an educational or cultural perspective. Here’s to another 200k deaths from a completely preventable pandemic by summer! #WINNING@LOSING!!!!
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The real question: how does Powell feel about Volcker?
We’re not going to get the ongoing targeted fiscal stim we need (Biden’s anemic $55bn/yr infrastructure bill aside), so everything is still going to rest on the feds shoulders. It’d be one thing if the fiscal stim could turn on as the Fed turned off, but thats hopeless. So whats Powell to do? His only hope is to scare the hell out of the market now, or embrace his predecessor in a couple years.