Stagflation: Retail Sales Tumble Just As Inflation Spikes

Lost in the chaos surrounding the blistering January inflation print, i.e. the market's worst case scenario which sent yields and the dollar soaring, and futures tumbling, was a just as troubling indication that the US consumer has officially tapped out, after January retail sales dropped by -0.2%, badly missing expectations of a 0.3% increase, and the biggest decline since February 2017.

In dollar terms, retail sales fell to $492.003BN in January vs $493.3BN in December.

Stripping away volatile auto sales did not improve the situation, with retail sales ex autos unchanged, far below the 0.5% expected.

Also unchanged were retail sales ex-auto dealers, building materials and gasoline stations, as well as the retail sales "control group" which excludes food services, automobile dealers, building materials and gasoline stations and which directly feeds into GDP, will send Q1 GDP forecasts lower relative to baseline expectations.

Looking at the breakdown of retail sales categories, 6 out of 13 categories rose vs 12 last January. Notably, non-store retailers, i.e. internet sellers, were unchanged in January: the first time this series has not grown M/M in years.

But what is most troubling is that this sharp decline in retail sales takes place just as inflation is spiking, confirming that this could be the start of another dreaded stagflationary episode in which retail sales and CPI diverge to the point where they drag the economy into a recession.

But the worst news: the US consumer is now tapped out, with personal savings just shy of all time lows.

Which means any further increases in spending will be reliant entirely on rising credit card usage, which in a time of rising rates and surging APRs, is virtually certainly not to happen.

Comments

Buck Johnson Cursive Wed, 02/14/2018 - 09:56 Permalink

I totally remember that also.  For years they have said that was the problem with the Japanese not righting off all those losses.  And then look at us, we not only won't do it we refuse to do it because it would hurt the big money guys and banks and also a lot of rich men and women.  It's funny you never hear anyone in the media say anything about why don't the US take their own advice they gave to the Japanese (who didn't take our advice).

 

 

In reply to by Cursive

Endgame Napoleon GreatUncle Wed, 02/14/2018 - 10:00 Permalink

We can’t have that here. We must have globalism and all of the cashing in on cheap, global labor by a few Americans. Additionally, we must have political parties who see nothing but race, trying to weld in automatic political support from race-based factions by reminding them, constantly, that citizens should not vote based on a common national or economic bond. They must vote based on bloodlines, skin pigmentation hues, multi cultures and other factional creeds. 

In reply to by GreatUncle

itstippy Oldwood Wed, 02/14/2018 - 12:42 Permalink

The new Dodge Trucks are Ram Tough, signify Guts And Glory, AND they have load leveling suspension.  A rugged guy like me needs one of them.

That fancy Mexican beer is preferred by sophisticated yet manly men worldwide.  A Man Of The World like me needs to drink it.

Harley Davidson motorcycles are ridden by financially successful yet socially rebellious guys who live free and ride hard.  That's me all the way.

I'm still trying to decide what male fragrance is right for me.  Should I smell like a guy who's been at sea for months, a cowboy just off a cattle drive, or a lumberjack in a logging camp?  So many great products to choose from!

In reply to by Oldwood

CRM114 aliens is here Wed, 02/14/2018 - 10:06 Permalink

Define need.

People feel they need to stay in, or ahead of, their social group. Or purchasing a product or service gives them a better chance of getting a partner.

That's 'need' to most people. And at a very fundamental level, having friends who think you're great, and getting laid, is all there is. Even to animals those are more important than food, most of the time.

Most marketing isn't a complete con, it's just exploiting urges that are already there, and encouraging people not to resist them.

So, yeah, they 'need' that new dress, or new kitchen, or new iPhone.

In reply to by aliens is here

Endgame Napoleon aliens is here Wed, 02/14/2018 - 10:07 Permalink

I want to upvote this, but can’t, having once owned a Main Street shop, selling items that no one actually needs. It is hard enough to survive, competing with the big boxes, when people are in full keeping-up-with-the-Jones’ mode, but you are right. 

How about buy quality items, made in the USA or by foreign competitors who compete on a level playing field, paying their workers wages comparable to American wages. Be willing to pay something for items that go beyond the basics so that small merchants can make a profit, accumulating quality items over time when you have limited means.

In reply to by aliens is here

Kidbuck Wed, 02/14/2018 - 08:59 Permalink

If it weren't for phoney statistics we'd have no statistics at all. Most of us are already in a recession or worse and have been since at least 2008.

TeethVillage88s Juggernaut x2 Wed, 02/14/2018 - 11:47 Permalink

But there is no living off the land, you have mandatory bills to pay, utility bills. Primarily you have TBTF and other Financials 'Printing Money out of thin air'.  We are a Money Center Economy, a Tax Haven for foreigners, dependent on Imports, where money is hoarded at the Top, and Wealth is Extracted/Harvested from the Common People who 50 Million of which get Welfare to act as Agent to pass Tax Dollars to the Top 1%.

- No, this time is different, the spending will continue

- I wish there was hope for deflation, but that requires restructuring, like preventing big players from buying up real estate

In reply to by Juggernaut x2

GreatUncle Wed, 02/14/2018 - 09:03 Permalink

Lol what did you think was going to happen when you tried to start to jack up prices using interest rates on an economy that is penniless or even bankrupt. Applying increases consumer taxes might generate the inflation also but has the same effect of reducing consumption so retail collapses.

Nowhere to go from ZIRP but to NIRP and use the QE also to try and sustain the thieving economy.

 

opt out Wed, 02/14/2018 - 09:04 Permalink

I like the ad above for the book ‘options trading for beginners’ 

hold on a sec... ok, heloc approved... kids college fund co-opted... I’m Ready!

 

RawPawg Wed, 02/14/2018 - 09:06 Permalink

CPI is just today's (Hot) Bullet Point...and it's only Wed

By Friday...Old News

Sadly, I wish i was Wrong

Fucking Crash,Already.....

LawsofPhysics Wed, 02/14/2018 - 09:08 Permalink

Stagflation?  LOL!!  Really?  Remind me, what is the total debt outstanding again?

This is not the 70's motherfucker, go ahead, let's see interest rates go to 18% again.  Go ahead, I triple dog dare you!!!

Sonny Brakes Wed, 02/14/2018 - 09:14 Permalink

It's called 'putting the cart before the horse' and it's how you try and take advantage. 'Start a business', they said, 'money's free, right now', they said, 'those jobs aren't coming back', they said, 'so strike out on your own', they said, 'you've got equity in your home you can tap to start a business of your own', they said.

We need a total reset, the TV and the MSM need to be put out of business because they are irresponsible when it comes to telling us the truth.

Iconoclast421 Wed, 02/14/2018 - 09:16 Permalink

This is a big deal. Not only did it miss by half a percent, but revisions took away almost another half a percent. Thats nearly a full percent lost.... This could be the inside info that kicked off the correction 2 weeks ago.