Something unexpected is going on in the U.S. economy. Inflation remains high, yet many Americans went on a spending spree last month, eating out at restaurants and shopping for cars. In ordinary times, that additional spending would be welcome news to an economy that's heavily dependent on consumer dollars.
But there's a catch: All that spending threatens to put more upward pressure on inflation at a time when the Federal Reserve is raising interest rates aggressively to keep prices in check. Inflation eased again in January – but there's a cautionary sign. That makes it critical to gauge how long that consumer spending can last.
If you ever find yourself saying something akin to 'My life sucks. Fuck it - I'm need a new skateboard' or anything remotely close to that, you get the idea...
Interesting. Just did a bit of grocery shopping. The checkout lady (one we try to use regularly) was telling us that the Walmart had not been doing great and hours were being cut. Krogers is in the same boat as well as Lowes and TSC. Yet this NPR article claims different? I think its all psycho-babble to make the sheeple go out and spend money they don't have
ReplyDeleteSpend money while it still has value. With high(er) inflation, saving means to some people eventually being unable to buy something because the price rose too much.
ReplyDeleteCredit card debt is 1 trillion, repo's are up significantly. Now for me? Wife and I are in our 70's. We both worked hard and saved. We now live on a golf course with no mortgage, two new cars; one paid and one lease. We pay all our bills as they come in. Steady income from half a dozen annuities;some we bought 25 years ago. Different times and different generation.
ReplyDeleteYou better hope those insurance companies that back those annuities don't go bankrupt.
Deletemy brother just figured that out. for years he used to get on my case because if I saw something I wanted, I bought it. right then. he remembers me telling him to buy gold when it was just under 800 . and it now at ??
ReplyDeleteBetween inflation, supply chain problems, government threats to make things unavailable (e.g., gas stoves, gas or diesel vehicles), if you've got the resources, get while the getting's good. Especially for durable goods or things that stockpile well. As long as the dollar keeps losing value and interest rates are only going up, people are trying to beat the rush.
ReplyDeleteBuying durable goods (tools, building material, staples) on credit makes even better sense if you can pay them off in inflated dollars. If you pay them off at all
DeleteThen the store rooms and warehouses are full. I am a independent trucker and the spot loads have been way down for the past 3 months. The trucking industry is short 80K truck drivers. Two years ago I made 6 figures in profit. For the same amount of miles and work I made $56K last year and this year has started off worse. FYI: a first year driver with Wal Mart makes $110k and they are home every other night.
ReplyDeleteSurly made the correct determination. I lived through massive devaluation in Argentina back in the 60's, every Friday, everyone that received a paycheck went out and spent 100% of it on their bills then food, appliances and whatever else they could find. Inflation was literally eroding the value so fast that food vendors were letter coding the cost of meat, cold cuts, cheese and so on, then they had a conversion table based on the daily government publication of the exchange rate of the Peso to the U.S. dollar that determined what the cost of that food item was that day. We are not there yet, but sure are heading in that direction unless something changes soon. Price of gold to the dollar would work fairly well for us under that model, seeing there are no other stable reserve currencies any more.
ReplyDeletePeople are spending in great amounts because everything is costing. Me and my wife are retired and our house, car, and everything is paid off. We have a freezer that we stock and when we do it is several hundred dollars. The main issue of cost is the Govt gets us for Medicare and drugs, which is a heavy drain. We never took COVID jab so we are healthy but are afraid to go near a hospital.
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