Retail Trade Report for November-2021

 

The Census Bureau released the advance data for November Retail. The real story is the upward revision for October, which seemingly blunted the November numbers. Factoring in inflation, less "stuff" got bought with more money. Hence the slight dip in after inflation numbers.

Still the amount of "stuff" being bought is well ahead of pre-pandemic economic expansion, in my opinion. For the month of November, the drop in department stores coupled with appliance and electronic stores were quite noticeable. The retail drinking establishment numbers were up.

As for those drops, the revised numbers upward in those areas for October, also lend to the idea of earlier holiday shopping. 

Altogether, not to good, but not too bad... probably more like a pause, with direction from here being anyone's guess. 

Producer Price Index for November 2021

 

The Producer Price Index as released by the BLS, this A.M. 

The Producer Price Index for final demand increased 0.8 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 0.6 percent in each of the 3 prior months. (See table A.) On an unadjusted basis, the final demand index rose 9.6 percent for the 12 months ended in November, the largest advance since 12-month data were first calculated in November 2010.

In November, the index for final demand services rose 0.7 percent and prices for final demand goods increased 1.2 percent.

Clearly not good, looking forwards. The Final Demand is higher than previous month, as is the intermediates. It would appear that a lot of inflation is to be passed on to the eventual consumer. There appears to be limited hope of annual inflation falling below 3% before next summer, based on these numbers. 

It should be noted that this is all in the review mirror as will be tomorrow's  Retail numbers. Those retail numbers, however... could provide a clue going forward.

Breakdown of CPI DATA and Real Earnings, November, 2021

 

The BLS report for November, indicated a 6.8% increase from year ago and 0.5% from previous month. 

A variety of other data releases indicated many different inflation numbers...

Of course, mine is also included at 4.7%...

Going forward, the expectation is for December's numbers to rise another 0.4% for the month, or 6.98% over the past 12 months. Meaning December is likely to be between that 6.98% and 7.16%. This month's number were last seen in June 1982, when it was 7.1%. I should point out the inflation rate was falling at that time, from a high of 14.8% in March of 1980. Good times!!!

There weren't many surprises in this report, and it was near expectations... so December expectations might be on target as well or possibly above, as the misses of late, have been on the underside. 

Real Earnings were also released...

The hourly real rate slipped a bit and is now back to March 2020 levels.

Despite the real hourly rate being near March 2020, real weekly earnings are still a few dollars above. 

Assumptions of Ancestry

 

We all really want to believe we are descended from greatness or at least that our ancestors were pure, with well developed moral ethics that does not exist in today's world. 

Yet somehow every family manages to have skeletons in the closet. Of course we attempt to say these are recent issues that did not exist in yesteryear.

To start with, if you think Scotch-Irish, means part Irish and part Scotch... not so fast. Who were the Scotch Irish ethnically? While the link mentions Ulster Scots, as they seem to be know in certain parts of the world (Northern Ireland), it probably is better to think of them as protestant. And yes, they settled in the colonies, most notably in the south. You should also remember that for all practical purposes... they spoke English. 

Also, think in terms of today as Northern Ireland and Ireland as two separate entities. Ireland was mostly Catholic, did not speak English. While there were Catholics in the colonies, they number something like 20K.

The Ulster Scots were generally from the lowlands of Scotland and did not particularly mingle with Catholics, nor care much for them. That feeling was mutual. They fought wars of religion, which is kind of odd, as the Scots, Irish, English, Normans, Vikings, etc. spent hundreds of years invading each other and... you can imagine the rest. 

It was the Romans that labeled the inhabitants of Ireland as Scots. Which then migrated to Scotland and many were sent back to Northern Ireland. 

There is a whole history of who are Scots, Scotch, Scotsmen, Scots Irish, Ulster Scot, etc. Apparently people in Scotland get ruffled, if you refer to them as "Scotch".

Needless to say, the family trees of all these folks are fairly knotted, in my opinion. So they couldn't use skin color, hair color, eye color or anything else to distinguish good from bad, so off to war over beliefs. 

The potato famine in Ireland occurred in the 19th century and mostly affected the city dwellers that did not speak English, had limited education and limited skills of value for the new land. These Irish were not very welcome in the new land. 

I should briefly touch on the propensity of Europe to fight wars over religion for long periods of time. It seems the plague created a great breakdown in society as that society rebelled against the morals as presented by the Catholic Church in far off Rome. The tithes and offerings demanded by the church with no respite in reducing the plague, called more than a few to question the role of the church. 

Here is a touching read about the morals of our ancestors during this period. You look around and can easily wonder if we are heading right back to that unrest. 

In any case the Catholic church violently seized the day and lay waste to any other religions. We were taught about the Spanish Inquisition and the horrors of that, but are never taught the greater horrors of the French Inquisition. I figure it had something to do with over 8,000 French troops at Yorktown and dozens of French ships offshore. (psst... the British would not have surrendered at Yorktown without the French making up over half the boots on the ground).

The French were more terrible than what is listed in this link. The French went so far as to empty the prisons and have the prisoners live with Huguenot families as the overlord of the house, with all the evil that can be imagined. 

This was not just a French phenomenon, as this type of behavior was throughout what is now Northern mainland Europe. There are numerous books on this matter, but it is rarely discussed in polite company.

Now that we have established the horrors of the people and why they fled to various countries seeking safety... and then many turned to crossing the Atlantic, which was also full of peril, as well as the manner of booking passage.

There were the indentured servants (slavery) that made the passage and served for their period of indenture... often under very harsh conditions. Then there was the matter of treatment of women on the voyages. Often times food and water was in short supply, so a barter system was commonplace. Let your imagination run with that. Women were not considered as equal to men, so take it for what it is worth.

I guess the point of all this, is to remind us that GGGGGrandfather might not have been the biological father of GGGGrandfather. Oh what a twisted tree.

So many skeletons and very difficult to truly know ancestry. Which should be no surprise, when a DNA test indicates something other than what you were brought up to believe.

BUT... there are numerous things we were taught or led to believe that do not adhere to the reality of history. Yet we adamantly state that our version of our history is true, and anything different is simply revisionist history. 

It is probably a case of this...

via GIPHY

Additional Sources:

• The Norman Conquest
• The Viking Age in the British Isles
• The Black Death
• Who exactly were the Scotch Irish
• THE HISTORICAL USE OF THE TERM “SCOTCH-IRISH”
• The Huguenots -  England's First Refugees
• History of the French Huguenots
• Indentured Servants
• Crossing the Atlantic
• Gottlieb Mittelberger, Journey to Pennsylvania (1750)

There is an abundance of literature on the internet and in a decent library to research. To assert your history is somehow different ignores the reality and suggests you can't handle the truth.

Is My Attempt at Hoarding Merely Transitory?

 

It depends on definitions. An individual's life is transitory, in the grand scheme of things.

This term cropped up regarding inflation and it may or may not be transitory, but what about my hoarding habits, due to covid? I realize that Jerome Powell has said it might be time to retire the term "transitory". Seems like an admission that someone was wrong, when first describing inflation as merely transitory. Which begs the question of how much else might be wrong? Oh well, back to my situation.

Shortages early in the Pandemic caused me to add shelves inside the house; stuff the pantry full and then those added shelves being packed. It took a while to get that done but was largely completed in August 2020. At that time, it became just a matter of maintaining the stash. 

Since then, there has been limited contact with people and mostly visits to healthcare settings, etc. This has become normal, and I don't seem to have a problem with the lifestyle. In fact, discovering the many "curbside" opportunities have led me to the conclusion that I can get by quite nicely.

Having established the "stash" of goods, worry over shortages have abated. Granted, there are items each week that are marked "unavailable", but generally within a couple of weeks... they become available. The stash covers that, except for "perishables" which at times is hit or miss. Doing curbside from 2 different stores each week, reduces that as well.

Periodically, I try to evaluate the hoarded goods and estimate long term needs. Generally, this means looking at the world of covid, which currently looks dicey, even with double doses and boosters. 

Which brings me to discuss this Omicron variant. A lot seems to be missing regarding knowledge of this variant. I feel confident our own personal lifestyle should keep us safe from these variants. These variants will likely continue for quite a while as new types of vaccines will likely need to be developed and the lag time between development and sufficient global uptake to slow the rate of mutations... seems to be out of reach.

I would suspect the "supply chain" crisis will be alleviated in the spring, but that does not necessarily mean everything will be readily available, especially in the food area. When I refer to supply chain crisis, I am referring to the piles of goods at our ports, intermodal congestion, etc. We still have the issue of countries closing borders, the flow of goods, etc. You can't really have port congestion if there is no cargo coming in. 

Inflation will likely continue to be a factor, well into 2022, imo. I can almost guarantee the CPI for November will be at 40-year highs and December might ease a bit from the November numbers, as energy seems to be plateauing. However, nothing else seems to be easing, although it may well be the October retail sales, which were stellar and might just be people ordering Holiday "stuff" early... to avoid any potential shortages. That might explain the less than stellar sales of the past Thanksgiving weekend.

Food does not seem to be catching a break and given the disruption to meat packers, etc. due to covid; disruption to farmers worldwide, due to weather and covid, it would seem to indicate no immediate relief in the inflation trajectory. 

While most of our food supplies are of North American origin and would seemingly be safe from issues overseas, etc., the packaging materials, equipment, and replacement parts of equipment used in the food sector are not so safe, imo. 

Just as many industries are moving from the just-in-time model to the just-in-case model, it seems imperative that I consider that as well... which I did but need to continue.

I cannot say when I will ease off the hoarding or if I ever will. There are certain benefits to knowing I have enough to overcome most issues. So, renewing my zeal for hoarding and maintaining the current stockpile will continue and perhaps I will consider expanding, although the latter is much less likely.

Everything stated to this point is about unknowns, regarding inflation and supplies, but another worry and also unknown as well... is breakdown of societal norms, via social upheaval and in case anyone has forgotten... 2022 is an election year for all of Congress and 1/3 of the Senate. By the way... vaccine hesitancy will likely become a bigger issue, the Supreme Court is weighing in on some "hot" topics and people are generally in a bad mood over just about anything you can imagine. Some people are mad at other people because the other people are mad and it escalates from there. 

Outbreaks of the past have seen public trust eroded and with it... a breakdown in societal norms. The Spanish Flu saw some of these societal issues regarding trust in authority figures and the Black Plague was catastrophic.

Trust in leadership had been waning pre-pandemic and multiple factors not directly related to Covid... has eroded the trust even more. 

History indicates that breakdowns in society are not merely transitory, in that it requires changes over may years to achieve a new normalcy. Transitory might mean a lifetime.

Another Government Release on Inflation for October, 2021

For October, we've had the C-CPI-U, CPI-W, CPI-U, R-CPI-E, Median CPI-U, PPI Final, PPI Intermediate. Confused? Maybe that's the point!

Now it's time for the PCE, PCE sans Food and Energy, and Trimmed Mean PCE, to round out the inflation reports for October.

The Forecast... PCE 5.08% and the Core PCE at 4.09%.

The Result... PCE 5% and the Core PCE at 4.1%. Oh, and the Trimmed Mean PCE is at 2.6%.

The monthly PCE was forecast at 0.7% and the core at 0.44%. Result was 0.6% and 0.4% for Core.

What does any of this mean? Frankly, I am only concerned about My Price Index and the direction it might be headed, and right now that direction is upward. 

So naturally, I am interested in the FED decisions to raise interest rates to slow inflation. But which rate of inflation is being watched. I know everyone has their own belief and the FED is theoretically supposed to keep inflation near the 2% level. But again, which rate, is it core... or is it trimmed.

A bit of history about the 2% target. It is not set in stone. For most of the past decade the debate has been about raising that targeted rate. Google it, as there are many articles regarding this matter. 

To the matter at hand... the FED has adopted an average of 2% and to make up for past "low" inflation...

By adopting average inflation targeting, the Fed is communicating that 2 percent is not a ceiling for inflation and that it may let inflation exceed 2 percent modestly and temporarily to make up for past low inflation. The key aim of this policy shift is anchoring inflation expectations. 

Just how long is that timeline and which inflation method is being used?

I would say the FED is in between a rock and a hard place, but I think the more accurate description is as follows...

Image a silk table cloth on a table. Atop that table cloth a house of cards has been built. Now you must remove that silk table cloth... without bringing down that house of cards.

What does that mean? I still have an imagination at my ripe old age.

Other stats from this morning (monthly, not adjusted for inflation).

• Advance Durable Goods... -0.5%
• Advance Wholesale Inventories... +2.2%
• Advance Retail Inventories... 0.1%

 

When Will the New Normal Settle In?

It seems everyone wants to know when this will end. The ideas being...  if covid were conquered or the supply chain crisis were resolved, as well as a host of others... things will get back to normal or at least a new normal. I guess we all want a bit of stability.

I'm not an expert in these matters, but like any red blooded knucklehead, I must tackle the question or get tackled back.

The biggest complaint seems to be inflation. I would suggest that the holidays could end the excessive consumer spending. I base the term excessive on the massive jump in durable and non-durable goods back in about April. Non-durables seem to be decelerating somewhat, although not rapidly. Of course many of these items can link back to imports and current port congestion.

I suspect this will begin to drop rather quickly in January. That might reduce the stress on the ports and some of the inland shipping. Maybe February for that part. 

As a result the ever escalating inflation trend might flatten out a bit. Note I said flatten out a bit... not drop. A lot of uncertainty regarding that. Just because the port congestion and inland shipping might be easing up at that point, does not mean the cost of what is being imported is going down. Not by a long shot, in my opinion. Granted the supply might outstrip some of the supply, but not every case. 

I really should bring up the 800lb gorilla that started this mess... Covid. As any good American, I tend to look at things American, without consideration of the rest of the globe. And Covid is a Global Pandemic. 

Best case scenario would be sometime next summer, the globe will have sufficiently wrestled the death rates to an acceptable level. It would be foolish to think it is going to be eradicated anytime soon. In the interim, there will continue to be stoppages in all manner of production, distribution amongst many of our trading partners.

This will continue create spot shortages, panic buying, hoarding, etc. I would expect food to be inflationary for another year, as weather related issues driving up costs, require another growing season. Energy is dependent on consumption, so not sure it will go much higher and could go lower... if consumption fell. A recession would certainly drive down the price and reduce inflation on many items... other than food.

Maybe, just maybe, a new type of normal will evolve, nearing New Year's Eve 2023.  

But then, that would assume no new variant crops up that is more transmissible or deadlier or vaccine resistant or some combination or even all.

Maybe the new normal is already here and we just need to adjust. [sigh] And a newer normal, one year from now... etc.