Friday, December 15, 2023

Talk about a misleading headline!

 

The Wall Street Journal headlined a report yesterday:


Americans Are Spending on the Holidays After All

So far so good for the holiday shopping season


The report claims:


The Commerce Department on Thursday reported that retail sales rose a seasonally adjusted 0.3% in November from October. Even factoring in some downward revision to previous sales data, this was better than the decline of 0.1% economists polled by The Wall Street Journal were looking for. It is just the latest indication that, despite the downbeat attitudes Americans profess in polls, a strong job market and continued reserves of savings built up early in the pandemic are giving them the wherewithal to keep shopping.

The news is better, really, considering what has been happening with prices. Overall inflation is still with us, but in many retail categories—particularly ones that end up under the tree—prices have turned lower. Tuesday’s inflation report from the Labor Department showed that toy prices were down 2.8% from a year earlier in November, that sporting goods prices were down 1.8% and that prices for computers, smart home assistants and the like were down 4.6%. Gasoline prices have been falling, too, and leaving Americans with extra cash to spend elsewhere. Exclude gasoline stations, and Thursday’s report showed that retail sales were up 0.6%.

The upshot is that inflation-adjusted, or real, retail sales in November were pretty good. It is still unlikely that real consumer spending will grow quite as swiftly in the fourth quarter as during the third, when it grew at a 3.6% annual rate, but it should be solid.


There's more at the link.

Is it true?  Well, that depends on how you define "truth".

Let's begin by saying that the "official" rate of inflation bears about as much relation to the truth as I bear to executed World War I spy Mata Hari.  I said last year, and Karl Denninger has recently repeated, that the real consumer inflation rate, based on what we actually buy and spend rather than what the government's economists laughably suggest we buy and spend, is over 30% - almost ten times higher than the current official estimate of "3.1% before seasonal adjustment".

Thus, to claim that "inflation-adjusted, or real, retail sales in November were pretty good" because they "rose a seasonally adjusted 0.3% in November from October" is . . . well, it would be laughable if it weren't so monumentally stupid.  What that 0.3% rise is measuring is how many dollars consumers spent in November compared to October.  The real question is, how many actual things - how many goods, how many services, how many items that can be physically counted - did that money buy for consumers?  Given a real, effective rate of inflation of around 30% or more for most consumers (in some areas of the country, it's more like 50%), if you answered "Less - much less" to that question, you win a coconut.

It's not that consumers are spending more to buy more, but that consumers' dollars are buying less.  That's the real measure of the health of our economy, and by that standard, we're doing dismally.  Just look at your own shopping cart in the supermarket, compare its contents to last year at this time, and you'll see that for yourself.  It's not a difficult calculation.  How much is every dollar I spend buying for me this year, compared to last year?  When I look at my shopping cart, the answer is, "About a third less, overall."  Karl Denninger obviously found the same thing, as illustrated by his trenchant comments, linked above.

The powers that be in our government, whether of Republican or Democrat persuasion, whether elected or appointed, whether bureaucrats or politicians, are united in their determination to make us think that we and our economy are doing better.  The truth is, we're not.  The truth is, we're dangerously, frighteningly close to an Argentina-style economic collapse.  It's less likely to happen here in the short term, but that's only because we have the entire world's economy by the short and curlies, given the dollar's domination of world trade and reserves.  However, that's changing.  Investigate for yourself how many countries, including some of our major trading partners, are actively seeking to use currencies other than the dollar in their international transactions.  I don't blame them.  They're seeing the dollar getting weaker by the day, and they're worried that their own economies might get caught up in the mess that is ours.  In their shoes, I'd be taking the same precautions against that.

Go back and re-read that WSJ headline in the light of the economic reality described above, then ask yourself:  Why are they so desperate to mislead us?  Why are they trying so hard to paint a rosy picture of an economy that's tanking?

And if, after that, you still trust government statistics about inflation (or anything else), there's this bridge in Brooklyn, NYC I'd like to sell you.  It's beautiful!  You'll make a mint out of charging tolls for its use!  The price is right!  Cash only, please, and in small bills.

Peter


8 comments:

  1. If you add that much of this "spending" is actually borrowing on credit cards, it's a dismal economic view covered with glitter.

    ReplyDelete
  2. 1) The WSJ reported accurately what Commerce released as data. No error there.
    2) Commerce will provide data massaged to look best for the Administration.
    3) Inflation as calculated by .gov takes in a known set of prices every time no matter who's party is in power. The fact that it does not take in fuel and many other necessities is a feature not a bug in their calculations.
    4) a 0.1% increase is in the noise and may not be even real after the complete set of data is available.
    5) When the total data is recalculated, it rarely reflects the optimistic outlook that is first reported. First data is as real as Bigfoot riding a rainbow farting unicorn

    I have to agree the number of items purchased / total dollars spent is a much more real world expression of inflation.

    ReplyDelete
    Replies
    1. Worrd games. I don't mean you, Gerry. I mean them; fedgov, media, economists, et al.

      I'll use a word that you recognize. I'll use that word to describe one minute of minutiae, even then in an offhand way.
      Meanwhile, you'll think of the standard definition of that word.

      I won't tell, or imply, or infer that I meant differently. I'll smile as I leave you in that wonderfully rosey bubble.

      Delete
  3. I laugh every time I hear them repeat the lie that people still have savings from COVID. That was sure some magic money they gave out. It goosed spending during the lockdowns, it let people pay down credit cards, and now it supposedly also let them build up their savings! Only an economist can think that that couple of thousand could do all those things and more. And keep doing it two and three years later.

    And that was money they insisted needed to be given out because the consumer was so tapped out by the lockdowns, that they couldn't even eat...

    --------
    We've seen recently that credit card borrowing is up, that defaults are up, that more people are behind on payments. We've seen banks and bigcorps laying off staff in the hundreds and thousands, and that's just what is noticeable enough to make the news.

    My food spend is way up, despite ruthless bargain hunting and sale shopping.

    My local businesses are cutting staff hours. Online auctions are bringing less money than 6 months ago for the same items.

    Housing sales are down, and sellers are cutting prices.

    I see more closed fast food franchise locations than I ever saw before, particularly Churches Chicken and Jack in the Box.

    This all despite living in Houston where we are seeing a huge net inflow of people, and a massive housing construction boom. If there is anywhere in the country with a strong economy it's Texas and Florida, but even we are getting crushed by inflation.

    Bad times are here, and worse is coming.

    nick

    ReplyDelete
  4. The Medias job is to support the gov’t narrative.

    Sadly I can’t find the link of a MSM Head saying that. This would have been around…obamas first term if I recall correctly.
    And nothing to do with him, but some other incident.

    ReplyDelete
  5. guns and ammo are still pretty affordable. Or at least I am still buying those things. But food is getting a little pricey in some places. No, we are not better off that one year ago. or even two. And we are worse off that we where under Trump. Both parties seem to want the same end position, just one will get there while I am alive.

    ReplyDelete
  6. I'm giving my grandchildren gold half-ounce Krugerrands for Christmas this year. They're unlikely to end up in landfill.

    ReplyDelete
  7. "Figures don't lie, but liars figure."

    ReplyDelete

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