An Economy Most Tortured

No, there wasn’t a retail spending boom in January, despite today’s headline figure sporting a 3% M/M gain.

Actually, inflation-adjusted retail sales in January were –1.8% below the level attained way back in March 2021. That is, real retail sales have been heading south for the last 22 months!

The culprit, of course, is the insane level of stimmies that Washington pumped into household spending accounts during the two years after the Donald’s March 2020 Covid emergency decree. The last of two of these—one signed by the Donald (December 2020) and the other by Sleepy Joe (March 2021)—caused real retail sales to go vertical, rising by a staggering 14.0% between December 2020 and March 2021.

For want of doubt, that’s a 40% annualized rate of gain. And after discounting for inflation.

It’s also completely nuts as an economic matter and provides a striking measure of just how far off the fiscal deep-end Congress was encouraged to venture by the Covid-hysteria. And also how easily Washington’s bipartisan, 13-month long spending and borrowing spree was enabled by the mad money-printers at the Fed.

Real Retail And Food Service Sales, February 2020 to January 2023

Even if you go full retard Wall Street and assume that the world starts over every month or quarter and that inflation doesn’t matter because it will be gone in a jiffy, there was nothing “strong” about the January retail number, as reported. In fact, January monthly sales of $697 billion were up only 0.7% from the October level. That’s just 2.8% on an annualized basis and is most definitely nothing to write home about in the context of 6-7% annual inflation.

So as it happened, the ballyhooed +3% January gain only occurred because November and December sales were down sharply from October, by a cumulative -$15 billion or -2.2%.  What we had during the last four months, therefore, is not a strong rebound, but a stutter in place.