Is the consumer running out of money? Probably so. Employment is declining. Income is slowing down. Inflation is rising. The outcome is that the growth of retail sales after inflation is plunging (click on graph to enlarge). This is the bad news.
The good news is that the business cycle will eventually solve these big issues.
1) Production, because of poor sales, will be curtailed.
2) Commodities are declining because producers do not need them due to slower demand.
3) Inflation will decline because of the weakness in commodities.
4) Income, after inflation, will increase because of declining inflation and the economy will strengthen again because consumers have more money in their pocket (after inflation).
We need to be patient and keep the faith. We are almost there. It is a matter of a few more months of pain. The business cycle works.
More, much more when you subscribe to The Peter Dag Portfolio on https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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