The growth of retail sales after inflation is declining rapidly (see enclosed chart; click on graphs to enlarge).
Consumers are making less money because of rising inflation. The outcome is slower retail sales.
The trend is bad news for the economy. It may have good news for stocks and bonds.
More on http://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
1 comment:
Many folks are contemplating as to what will be the catalyst for the next market correction. Certainly we have liquidity that is drying up a bit, but so long as the yen stays weak and their interest rates low, it hardly matters about what others do--or so it seems.
I'm beginning to see some percolation of wisdom about the American consumer. Specifically, how shallow the arguments about how a weak dollar is good for exports (we do not export much) and how strong the global economy is (the global economy depends on the tiring American consumer.)
I find it a sad irony that the American consumer has propped up so much of this global expansion, but as a group they have not received on a relative basis any just reward. The excesses of stock options back-dating, CEO pay (in comparison to the rather paltry increases in wages that have NOT kept up with real inflation), and the fact that many have been priced out of a home due to speculation in this asset class (due to low rates).
So my guess, then, is that when (if?) the Am. consumer irrefutably falters, we will have the "long awaited" catalyst. It will be more powerful than any utterances of our former Fed chair.
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