Marc Cuniberti The latest figures on consumer spending show appliance sales slowing.
Home Depot, in their latest earnings call, stated sales on appliances costing over $1,000 were down 5.5% compared to last year.
Although not a monumental drop, these things start gradually.
Notwithstanding the brutal drop-off in sales of Bud Light beer due to the Dylan Mulvaney fiasco, which saw an April to June drop in sales of the beer a whopping 10.5%, and the entire planet’s businesses being throttled back by overzealous politicians everywhere because of the fear of CoVid, a 5.5% drop in appliance sales as mentioned by Home Depot is significant.
Readers of this column will know I have stated multiple times, that in my opinion, inflation is nowhere near under control, and its full effects on consumer pocketbooks has yet to be seen.
Although statistics will occasionally note a drop or slowdown of certain metrics that measure inflation, in the long term, inflation may be here to stay for a while, and at levels that may devastate the finances of consumers everywhere.
This analyst blames the decades of money printing by central banks worldwide, and exasperated by the lavish CoVid spending which began in early 2020.
Never before in human history has so much money been created from nothing. The multiple CoVid bailout programs to consumers witnessed 5 trillion plus (we really don’t know the actual figure) handed out like candy to every Tom, Dick and Mary with little regard or oversight.
Add that to the five decades or so of government deficit spending which easily exceeded many hundreds of trillions, and in my opinion, we have the reason prices are rising and may continue to do so no matter what our monetary authorities try to do to stop it.
Although it took a while to see the spend-happy consumer finally start to pull back, it’s likely only their CoVid savings from the lavish government programs prolonged the inevitable pull back that we may now be witnessing.
From a Google search, “some 53 percent of Americans, according to the survey, have reduced their spending on groceries, 50 percent have cut down spending on clothes, and 45 percent spend less on entertainment and leisure activities. Some 40 percent of respondents have cut down on vacations—a rising phenomenon previously reported by Newsweek”.
The Federal Reserve meets again soon and another interest rate manipulation is expected. Analysts forecast another ¼ % increase in the overnight discount rate.
The latest round of increases by the Federal Reserve holds the record for the most interest rates bumps in succession, both in quantity and speed of occurrence.
With rates now close to 5% or more, historically, when overall interest rates closed in on 5%, something usually ended up breaking in the economy, be it some part of the banking sector or the economy itself.
Either that or the consumer was so badly hurt by the rising cost of debt (caused by the increase in interest rates) and/or rising unemployment, the political pressure on the Federal Reserve caused the Fed to quickly lower rates again.
It’s difficult to forecast just how long inflation will stick around and at what level it will be at. We have no historical precedent to draw on when it comes to the amount of money creation we have witnessed in the last 5 decades coupled with the massive CoVid payments that were given out.
What we do know is the full effectiveness of the Federal Reserve and its monetary tools have yet to be seen.
Whether they can be successful in their attempt to halt the inflationary fires that now burn hot is a question we may not find the answer to for a very long time.
“Watching the markets so you don’t have to”
(As mentioned please use the below disclaimer exactly) THANKS (Regulations)
This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services. Email: [email protected]
