Wednesday, February 16, 2022

Retail Trade Report for January-2022

 

The Census Bureau released the advance data for January Retail. Woohoo, it was up 3.8% AFTER a downward revision of last month by -2.5%. (Which wasn't the only revision.)

This was last month's graph...


In any case the 3.8% would appear to be stellar until you realize it is not adjusted for inflation. When looking at the past few months... it becomes clear that the amount of "stuff" we are buying has plateaued, while the cost of the same amount of "stuff" has simply risen. 

Frankly, I don't understand the hoopla surrounding this report. Of course, I am just an ignorant hillbilly and know nothing of these matters. 

Tuesday, February 15, 2022

Producer Price Index for January 2022

 



The Producer Price Index for final demand increased 1.0 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 0.4 percent in December 2021 and 0.9 percent in November. On an unadjusted basis, final demand prices moved up 9.7 percent for the 12 months ended January 2022. 
In January, the index for final demand services rose 0.7 percent, and prices for final demand goods moved up 1.3 percent.


Again, an ever so slight deceleration in upstream stages. (note the Eurostat for US is my estimate as the actual info has not been published).

The retail report tomorrow, while also backward looking, could provide some indication of future activity.

Just read an article that said $115 per barrel of oil could drive inflation to 10%. My calculations indicate a figure nearer to 8.4%, which leaves the over 92% of the remaining to increase above that rate. Let's not fixate on just one part of the consumer purchasing basket, imo.

Thursday, February 10, 2022

Breakdown of CPI DATA and Real Earnings, January 2022

 


The BLS report for January, Indicated a 7.5% yoy inflation rate with the month on month being 0.8% unadjusted or 0.6% after adjustments.

With this release comes a variety of other numbers...



I am at the 5.7% annual rate...


Not as bad as the overall, but nothing to be joyful about. Food was up, but the biggest portion was attributable to medical costs. Much of that was beginning of the year co-pays and deductibles. Hopefully, the following months will recede to rather low levels of medical inflation... compared to year's past. 

I had previously forecast January to fall between 7.04% ~ 7.40%. That 7.5% was a bit of a shock and now brings the 7.62% rate in February 1982 into play. The current forecast for February numbers, due out in March are 7.59%~7.9%, 7.74% as median. 

On to the earnings report.
The hourly real earnings (earnings after inflation adjustment) edged up 1¢. This would seem to indicate that earnings are at least keeping up with inflation. However...
Real weekly earnings slipped, due to a decrease in hours worked. This is the 2nd straight month and is not reassuring, imo.

As for the CPI forecast, more will be clear on Tuesday, with the PPI release. Let's keep our fingers crossed. 

Friday, January 28, 2022

Near End of the Month, So December 2021 Inflation Numbers and Other Stuff.


It's all the inflation numbers in one chart. As always, the MPI is most important to me, as it is what I spend.

The forecast across the board for January is upward... except maybe for the PPI. It's hard to imagine consumer spending slipping, inventories jumping and orders lagging... resulting in anything other than a deceleration of the PPI. But the experts seem to think May is when things will start to decelerate for all the above. In fact the PPI is forecast to reverse in May, back to 5 months ago range, which will somewhat stagnate the monthly CPI... not a reversal.  

BUT... a bit of history. Last year, there was consensus on helicopter money directly to the masses. Our leaders wanted it to jump start the economy and the FED said do it, we've got your back. The the term transitory became a popular word... until it was decided it might no longer be applicable to the current situation. 

So the FED is fixing to do something and the knives are out. Who knows what will happen?

Unfortunately for a lot of Americans on fixed income, it will not help, as the die is already cast. A fixed income limits any increases in spending and reduces the amount purchased. The alternative would be adding debt, which would now be costlier, if the rates are raised. It is a never ending cycle, imo.

Enough of the depressing news. I'll go watch some YouTube comedians or take a nap... or both.

Thursday, January 27, 2022

2021 GDP Results and First Look at 4th Quarter 2021


Real gross domestic product (GDP) increased at an annual rate of 6.9 percent in the fourth quarter of 2021 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.3 percent.

...

Real GDP increased 5.7 percent in 2021 (from the 2020 annual level to the 2021 annual level), in contrast to a decrease of 3.4 percent in 2020 (table 1). The increase in real GDP in 2021 reflected increases in all major subcomponents, led by PCE, nonresidential fixed investment, exports, residential fixed investment, and private inventory investment. Imports increased  

 All of which sounds really good and seems to be "great" news. Being the contrarian, I seem to find things that trouble me. The inventories and correlation to consumer spending. They look stellar on the annual basis, but 4th quarter seems troubling to me. 

The inventory numbers made up about 73% of the 4th quarter numbers. The difference being a chabe for the 6.9% annualized to something akin to 1.8% annualized. Which even at that lower number was better than the meager 0.48% rise in the goods category sans services and 3.2% annualized with services. Rah! Rah!

The report does make note of certain durable goods making up the increases in inventory, yet overall consumer spending in this category is barely making gains. That is not surprising, given the past year, but not sure how consumer spending will react going forward. 

Setting aside the inventories and intellectual property products... the Gross private domestic investment category slid -1.2% annualized. 

Personal consumption expenditures rose 3.2% annualized, but on the back of services with a respectable 4.8% annualized rise. Without the services... 0.36% annualized.

My small brain cannot find all that "wonderful" news, but I may be overthinking it, considering my small brain. 

To summarize, the consumer spending, which is the driver of the economy, is slowing considerably; the private sector sans the aforementioned... is slowing. 

So if inventory is rising dramatically, then one of the following would seem the likely cause...

  • The supply chain snarls are finally becoming unsnarled
  • Suppliers have increased production
  • Consumers are slowing their purchases

Not real sure how this can be seen in such a positive light, especially with the doldrums of winter upon us, the negative outlook of the consumers, etc. Unless the latter weighs on inflation and slows it down a bit. 

Friday, January 21, 2022

Maybe Time for a Hoarding Update and Some General Trivia!


I should start by pointing out that I am starting this blog on 1-16-2022. At this time, I am sitting here, awaiting the big storm Izzy to descend upon us. No worries, as I have no need to leave the house until 1-31-22 and maybe not then, as I have become quite the hoarder. The only issue would be a prolonged loss of power, which should not be such a worry in my community.

1-19... There are apparently, a number of storms likely to cycle through the region over the next couple of weeks, so just need to hunker down. Have ordered the covid tests, but not sure if we will use them or need them anytime soon. Of course, it sounds like we won't get them anytime soon as well. 

1-21... Checking the 2 week weather outlook and it seems to indicate prolonged colder than normal temps, with bouts of snowfall. Nothing is set in stone, so I'll keep checking. Typically order groceries for pickup on Wednesday's and Thursdays. 

This may seem odd, considering the first paragraph, but while I have stored a good amount of groceries and can claim starvation is not in the cards... there are certain food groups that don't store well over time. Such as veggies, fruits, etc. 

On one social websites I frequent, the following was posted... "there is a pasta shortage, as shipments from Italy cannot get into U.S. ports." This reminded me of the BBC show from the 50s, on an April Fool's broadcast... about spaghetti trees.

That is not to say we do not import some pasta from Italy, but it would be specialty brands, as most pasta is made in the USA. It was good for a laugh at least.

There are many nuggets of humor to be found on these websites, as long as you look for the humor, instead of looking to criticize. Shaking your head in disbelief and then having a good laugh is probably the best medicine. 

Friday, January 14, 2022

Retail Trade Report for December-2021

 


The Census Bureau released the advance data for December Retail. Last month the October number was revised up a tad, but this month it was revised down a tad and the November was revised down as well. Basically, this blunted the -1.9% fall in December Sales on an adjusted basis.

Furniture and Home Furnishings (-5.52%, -689M), followed by Clothing and Apparel (-3.06%, -824M), then Electronics and Appliances (-2.94%, -224M). It is no surprise that Department stores were (-6.95%, -817M) for the month.

Now for the eye opener... Non Store retailers, which includes Electronic Shopping and Mail order... (-8.7%, -7,867M)

Now for the stuff this ole Hillbilly can't fathom.

Headlines say Omicron was a factor and I would tend to agree, but the Electronic Shopping and Mail order segment would seem to benefit... but it didn't.

Supply Chain problems do exist, but with the Business and Wholesale Inventories up through November, I would have thought December would have been better.

Labor shortages, due to Covid... possibly, but hard to grasp how, considering the industries being impacted, etc. 

Then there is the major difference in unadjusted and adjusted, with the unadjusted indicating the opposite of what is possibly happening... 

Adjustment of estimates is an approximation based on current and past experiences. Therefore the adjustments could become less precise if current competitive pressures, changes in consumer buying patterns during holiday periods, and other elements introduce significant changes in seasonal, trading-day and holiday patterns.

Would Omicron/Covid have affected consumer buying patterns? 

Clearly, I am not a rocket scientist, so what do I know? However, I can speculate, opine/whine, etc. 

One year ago, the vaccine was being rolled out, the news was upbeat, inflation was tame, with those small stimulus checks rolling out in January... yet the February numbers lagged, as it was winter after all, until the big stimulus kicked in, and of course inflation followed. But the joy was everywhere, the end was in sight, the good ole days were almost here again.

1 year later and we don't have a lot of upbeat news and actually quite the contrary, no stimulus checks, inflation is running hot, but not enough to warm the weather. The supply chain is still snarled, covid is threatening to make it worse amongst our trading partners... etc. etc. Geo-politics is looking very unhealthy.

AND... if we haven't gotten sick by or of - Covid, it is an election year. So don't expect any help from D.C. - on anything. But you knew that already... or should have.

 


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