What Comes After Mind-Blowing Free-Money Blow-Off Spike in Retail Sales? A Spike Doesn’t Spike Forever

Powered by price increases.

By Wolf Richter for WOLF STREET.

Total retail sales – not adjusted for inflation, now a big factor – inched up 0.7% in August from July, to $619 billion (seasonally adjusted), up a stunning 18% from two years ago and 15.1% from a year ago. The insert in the chart shows that this wasn’t a proper “rebound,” as it has been widely called in the media today, but an uptick in a four-month down-trend from the mind-blowing superlative historic free-money blow-off spike in April. August retail sales were down 1.6% from that April stimmie-craziness:

A spike doesn’t spike forever. But Americans are still making a heroic effort to spend the pile of free money they got … the last two stimmies totaling $2,000 per person, the $800 billion in forgivable PPP loans that just about everyone with a little or big business got, extra unemployment benefits, massive gains on asset prices, all of it fueled by the Fed’s $4-trillion money-printing binge and the government’s $5-trillion deficit-spending binge in 18 months, which created the most monstrously overstimulated economy and markets ever.

New & used auto dealers and parts stores: Sales dropped another 3.6% in August from July, to $121 billion (seasonally adjusted), fourth month in a row of large declines off the free-money spike in March and April.

There is plenty of demand, and prices have surged amid inventory shortages of used vehicles and historic inventory shortages of new vehicles. Customers face dealer lots that are nearly empty and out of popular models amid rotating shutdowns of assembly plants globally due to the semiconductor shortages.

But these $121 billion in sales in August were still up 10.7% from a year ago and 22.2% from two years ago, in dollar terms, thanks to massive price increases – 32% year-over-year for used vehicles and 7.6% for new vehicles, according to the Consumer Price Index.

The sales decline shows in unit sales, not dollar sales: New-vehicle sales in August dropped for the fourth month in a row to 1.28 million vehicles, down 20% from March when there was still enough inventory to sell. The Seasonally Adjusted Annual Rate (SAAR) of sales, a standard industry measure, plunged to the lowest, beyond the lockdowns, since September 2011:

The overview. Auto dealers and parts stores are by far the largest retail segment, with a share in normal times of around 21% of total retail sales (black line in the chart below). Nonstore retailers, which is mostly ecommerce, have become the second retail category (red line), having surpassed Grocery and beverage stores (green line) and restaurants and bars (purple line) in 2019. They’re followed by general merchandise stores, building material and garden supply stores, and the rest:

Ecommerce and other “nonstore retailers”: Sales jumped 5.3% in August from July, to $88 billion, seasonally adjusted, up 7.5% from the spike last year, and up 25% from August 2019. Nonstore retailers include ecommerce sales by any retailer, from online-only retailers to the online operations of brick-and-mortar retailers. It also includes sales by mail-order houses, street stalls, vending machines, etc.

Food and Beverage Stores: sales jumped 1.8% for the month amid, to $76 billion, up 5.7% year-over-year and up 15% from two years ago, fueled in part by rising prices, and in part by the pandemic shift to working from home or not working at all, which shifted some sales from commercial buildings and lunch places to supermarkets.

Restaurants & Bars: Sales remained flat for the month, at $72 billion, matching the record set in July. Year-over-year, sales jumped by 32% and compared to two years ago, by 11%. But the combination of widespread price increases (0.4% for the month, according to CPI) and flat sales indicate that the phenomenon of “revenge spending” is starting to lose a wee bit of steam:

General merchandise stores: Sales jumped 3.7% for the month to $58 billion, the second highest ever behind the stimmie-spike of March 2021. Up 13.1% year-over-year and up 16% from two years ago. Sales at brick-and-mortar stores of Walmart and Costco are in this category, but their ecommerce sales are not.

Building materials, garden supply and equipment stores: Sales rose 0.9% for the month, to $39 billion, after four months of declines, as the sudden passion for DIY is beginning to fade. Sales were up by 6.3% year-over-year and by a still astonishing 22% from two years ago:

Gas stations: Sales ticked up 0.2% for the month, eking out a new all-time high of $49.4 billion – just above July 2008 ($47 billion) and February 2013 ($49 billion). Up 17% year-over-year, and up 36% over two years. Sales have been powered by gas prices that jumped 2.8% for the month and 43% year-over-year. Sales at gas stations also include sodas, junk food, beer, motor oil, etc.:

Clothing and accessory stores: Sales edged up 0.1% for the month, to $26 billion, up 39% from the collapsed levels a year ago, and up 15% from two years ago:

Miscellaneous store retailers, which include cannabis stores: Sales rose 1.4% for the month to a record of $14 billion, up 19% from a year ago and up 23% from two years ago. These specialty stores are focused on one category of product, such as art supplies, beer making supplies, wine making supplies, binoculars, etc., and include the booming sales of legal cannabis stores:

Furniture and home furnishing stores: Sales jumped 3.7% for the month, to $12 billion, up 16% from a year ago and up 22% from two years ago:

Department stores: sales rose 2.4% for the month, to $12 billion, up 29% from the collapsed levels a year ago, and up 6% from two years ago. This does not include their ecommerce sales:

Sporting goods, hobby, book and music stores: Sales fell 2.7% for the month, to $9 billion, the fifth month in a row of declines, as the fabulous stimmie-spike in March is unwinding slowly. Sales are up 10% year-over-year and 38% from two years ago:

Electronics and appliance stores: Sales fell 3.1% for the month to $8.3 billion, up 18% year-over-year and up 3% from two years ago.

Electronics and appliances are a big business, but specialized electronics and appliance stores handle only a small part of it. Much of it has shifted to ecommerce. And a big portion has always been sold at other types of stores, such as Sears (RIP), Costco, Walmart, and Home Depot, which are in other categories of retailers. This category here is limited to the brick-and-mortar stores of electronics and appliance retailers, such as Best Buy:

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  140 comments for “What Comes After Mind-Blowing Free-Money Blow-Off Spike in Retail Sales? A Spike Doesn’t Spike Forever

  1. Bullstreet says:

    Minor uptick, the financial media portrayed this as a surprise to the upside, got to goose those slumping September markets.

    • RH says:

      Also, very temporary: this is like the release of an improperly tied off balloon that shoots off like a rocket —but only for a short time. On the plus side, since world manufacturing was transferred by the unwise into communist China, the cessation of this aid means that we will no longer be inadvertently subsidizing the Chinese economy and PLA with our purchases. On the negative side, this pandemic really hurt our smaller businesses, and will continue to hurt them, so the upcoming demand crash afterwards is not going to be good for our economy.

      It is too bad that, unlike Japan, we did not put in stronger incentives to encourage manufacturers to come to the US. While our economy is not totally destroyed, it has definitely seen better days.

  2. Mark says:

    Last year when roads and airports were empty I bought oil company stocks at depressed prices. Americans have a short memory and come out of every crisis spending like drunken sailors.

    I need a new car, but shortages are causing dealers to ask more than sticker. So I just put $800 into keeping the old clunker going a few more years.

    Biden is about to put millions out of work. I doubt there will be more unemployment bonuses, because the idea is to punish the non compliant *deplorables*. Will this cause another recession? The next year will be interesting in the negative sense.

    • TenGallonHat says:

      I hope you didn’t let a service center gouge you like they tried with me.
      Off to polish the headlights on my clunker! One of these days I’ll actually wash it…

    • makruger says:

      At the risk of this question sounding political….

      While I expect some rough times when the current bull market finally exhausts itself, what particular Biden administration policy do you expect will result in “millions out of work”?

      Fiscal spending?
      Health policy?
      Tax policy?
      Something else?
      Really I am rather curious why you’re saying such things.

      • MonkeyBusiness says:

        The jab mandate didn’t cross your mind? Some hospitals are now running on fumes because nurses refused to get the jab.

        • TenGallonHat says:

          Talked with a traveling nurse the other day. Nurses “just have to deal with” the shortages. Treated like just a number, especially newbies. (Been there, done that). Jab requirement here now also, even the Catholic hospital (a big W T F moment [oh yeah, look at the current Pope]). Instead of good recruitment and retention, they pay double a regular nurse’s salary for a traveling nurse. M0R0NS!

        • MonkeyBusiness says:

          We all have Private Equity and Greed to thank for all the wonderful things happening to our “health system”.

        • Depth Charge says:

          “The jab mandate didn’t cross your mind?”

          I mentioned this a week or so ago. Wolf mocked me even though I quoted a link from a single hospital in Houston which lost 155 employees alone from the mandate. You can spend all day and night Googling “job losses due to mandatory vaccination” and not read all the articles. Weekly new UE claims are approaching 400,000. WORST. ADMINISTRATION. EVER. And I though Shrub II was bad.

        • Wolf Richter says:

          Depth Charge,

          You’re being funny. Initial unemployment claims today edged up from a pandemic low 312,000 last week to the second lowest of the pandemic of 332,000 today. Two weeks ago, the pandemic low was 345,000. I’m surprised it only ticked up a little, given the hurricanes. In the past, hurricanes that made landfall in a densely populated area produced quite a big jump in claims.

          Here is the chart of initial unemployment claims that you mentioned. I noted in green the administrations for your reference. See if you can identify the location for your statement: “Weekly new UE claims are approaching 400,000. WORST ADMINISTRATION EVER”:

        • David Hall says:

          A hospital in Parkersburg, WV had to close its emergency room doors this week as the hospital was low on oxygen due to an influx in COVID patients.

          After ignorant people refused vaccinations, hospitals have no vacancies, healthcare workers have died never to return. Pretending the virus is less harmful than the vaccine is a problem.

          The average COVID hospital treatment costs $40,000. Nurses afraid of needles may be in the wrong business.

        • COWG says:

          For TGH,

          Hospitals prefer the “ traveling nurse” because of accounting and cost control…

          Paying a mercenary for a few weeks is a whole lot cheaper than raising compensation for hard staff that lasts forever…

        • Depth Charge says:

          Wolf – My “worst administration ever” was not based upon the UE claims, but the braindead policies coming out of this absolute abortion of an administration. Of course you’re going to see the highest claims under the previous admin – that’s when the entire economy was shut down! Filed under: DUH.

          We are in the early innings of the absolute destruction of the middle class and poor by this inept – dare I say EVIL – amalgamation of crooked politicians, special interest lobbyists, crony capitalists, climate change phonies (let me fly on my private jet around the world to lecture you on how bad your car pollutes and force you into a lithium strip-mining EV), hangers on and ne’er do wells.

          And, as always, none of this is an attack on you. I love your site and data, which is why I am here. We can certainly have different opinions and viewpoints on politics. The folly of the country today is the idea that everyone has to get in line or be canceled. Sorry, I don’t fit into that mold.

        • Freedomnowandhow says:

          …..and in the Our Congress, Republican leaders during a investigation of Afganistan withdrawal are asking. ” who in the White House is purposely shutting off Pres. Biden’s mike when answering questions. Sure we are following your line of thought.

        • Wolf Richter says:

          MonkeyBusiness,

          These hospitals are “running on fumes” because their ICUs are crammed full with the unvaccinated.

        • MonkeyBusiness says:

          Wolf, I lifted this from CalMatters.

          “But burnout isn’t the only thing compounding California’s nursing shortage: The state’s new vaccine mandate for health care workers is already causing headaches for understaffed hospitals before it is even implemented. Some traveling nurses — who are in high demand nationwide — are turning down California assignments because they don’t want to get vaccinated.”

        • Wolf Richter says:

          MonkeyBusiness,

          Yes, keep those unvaccinated nurses out of California. Keep them in Florida. And certainly, keep them out of our hospitals. I don’t want to be treated by a healthcare worker who turns down the vaccine for some idiotic reason.

          My healthcare provider, “Kaiser Permanente is requiring all 240K employees, physicians to be fully vaccinated against COVID-19” as of Aug 2. Works fine.

          Duh!!!

          Covid is a preventable disease for those people who want to. As for the rest… covid is taking out about 1,500 unvaccinated Americans per day. This is a HUGE tragedy. Like 5 Boeings filled with unvaccinated Americans crash every day. That’s 150,000 unvaccinated Americans in 100 days at the current rate. It’s tragic because it’s so preventable.

        • Coffee says:

          Insurance companies can increase the monthly cost of insurance by several hundred dollars for the un-vaccinated. That would “encourage” people who have insurance to consider getting the vaccine.

          And help offset the hospital bills.

        • Auldyin says:

          @MB
          Medical people not taking jabs. Gosh!
          What could they possibly know that we aren’t being told?
          Nah! They must all be dumb. But then how did they become medical professionals in the first place?
          I can’t figure it at all.

        • Old School says:

          David Hall,
          Two countries at extremes in their management of the disease Israel and Sweden. We will not know who played their cards best for a few years.

        • Wolf Richter says:

          Old School,

          We already know some of it if we choose to look at the numbers. Deaths per 100,000 population:

          Sweden: 144.8
          Israel: 80.5

          Sweden had 80% more deaths per 100,000 population than Israel. So which government values the life of its people more? Take a guess.

          And Sweden too essentially shut down, most of it voluntarily because people stopped doing stuff, going places, etc. once the dead bodies started piling up. Airports and ferry terminals were empty, etc.

          Sweden GDP (in local currency) plunged 8% (32% annualized) from Q1 2020 to Q2 2020, and as of Q2 2021 has still not gone back to pre-pandemic levels. GDP plunged because people stopped doing stuff so they wouldn’t get Covid, which is a natural human reaction.

        • Yossi says:

          Wolf, I live in Israel and I can tell you that as a nation we are extremely unsafe. We are extremely lucky to have a young population here.

          I am not saying the vaccine doesn’t help, but do take into consideration the age factor.

          Under the age of 60 we have about 2 severe patients per 100k pop if they are vaccinated, and 4.5 patients per 100k pop if they are unvaccinated.

          Above the age of 60 the difference grows dramatically, by a factor of 10. About 30 severely ill per 100k pop for the vaccinated, and 300 severely ill per 100k for the unvaccinated. (Pre 3rd shot data)

          Also, there is a difference in the way we define a severely ill patient compared to the US, we are harsher.
          I have the charts if you are interested.

      • Cem says:

        Don’t expect a data-driven response if any at all.

        • phleep says:

          > “a single hospital in Houston which lost 155 employees alone from the mandate.”

          Due to unreasonable and irrational refusal of even health care workers to comply with an utterly reasonable, proper and necessary mandate, saying more about pervasive cultural refuseniks-without-a-(rational)-cause than anything else.

          Fixed it for you.

          This is not the country that won World War 2 — where young men marched out due to “mandates” to face death, fix the world and put us on historical levels of success for decades. Most startling is, Texas culture supported their valiant sons making that sacrifice. Now both sides politically seem to have descended into pre-chewed narratives of hurt victimhood that drown out reason and balance, and look first for some too-obvious “other team” opponent to blame for everything they are sulking about.

        • Trailer Trash says:

          Phleep, some people still think concepts like “informed consent” are important. Whether the vaccines are safe or not safe is a separate issue.

          It’s not really voluntary consent when a person is faced with “take the jab or your career is over”.

          (I come from a family of nurses and nurse practitioners.)

        • Depth Charge says:

          “Due to unreasonable and irrational refusal of even health care workers to comply with an utterly reasonable, proper and necessary mandate, saying more about pervasive cultural refuseniks-without-a-(rational)-cause than anything else.”

          That is purely opinion, no facts. Narcissistic much?

        • Reminds me of Reagan busting the Air Traffic Controllers Union. Biden reminds me of Reagan, came in after a one term president who was loved, but not liked. There was a recession and by the end of the first term the economy was recovering, and he won in a landslide. Reagan had dementia too but the way.

        • Depth Charge says:

          “Reagan had dementia too but the way.”

          This guy is way further gone.

      • bstoo says:

        All of the above!

    • Ralph Hiesey says:

      Mark- I must have missed something in the news. Should I be following Fox more carefully?

      What was it that Biden is going to do to punish the non compliant “deplorables?” That will cause another recession?

      Maybe because he’s trying to do something try to extend this Covid epidemic as long as possible , to keep those deplorables from getting their jobs back anytime soon?

      Or what did I miss?

  3. Trailer Trash says:

    Some of us poor people are still getting unexpected help from the government. Today I received a notice from LIHEAP of additional benefit for the benefit year just now ending. It will go a long way towards covering the big run-up in fuel oil prices.

  4. 2banana says:

    Department stores broke a 20 year down trend!!!!

    “Department stores: sales rose 2.4% for the month, to $12 billion, up 29% from the collapsed levels a year ago, and up 6% from two years ago. This does not include their ecommerce sales”

    • Djreef says:

      🍾 YAY!!!! 💥
      🎊

    • RH says:

      That inflation-caused increase will probably stop soon: recent reports are that Evergrande is NOT going to be bailed out by the CCP. “Quos Deus vult perdere, prius dementat!”

      RIP, CCP. We will not miss you. LOL. (I sure hope that I am not jumping the gun here and will have a chance to visit Beijing and take selfies with Xi’s remains.)

  5. MonkeyBusiness says:

    Impossible Wolf. Consumer confidence tumbled from 125.1 in July to 113.8 in August!!!

    ROFL. Muppets will buy buy buy no matter what.

  6. MarketMissing says:

    With all the inflation are more goods and services being exchanged or are transactions dropping while hidden by higher prices?

  7. Enlighten Me says:

    Sorry for dumb question but what is WTF?

    • Wolf Richter says:

      “What the F**K*: expression of wild-eyed astonishment and total bafflement about something utterly inexplicable in normal times. Often punctuated with a question mark: WTF? But not here.

    • MCH says:

      Or put it another well, it should be a Wolf Street trade mark if he added the word chart. The trademarked WTF chart from Wolfstreet.

      Has a nice ring to it.

      This reminds me, I noticed how Marketwatch has never published one of those charts from you before… do you think it might be a bit eye opening?

      • Wolf Richter says:

        MarketWatch republished several of my Tesla double, triple, and quadruple WTF charts of the year.

        • andy says:

          Wolf, are you going to write about Fed “ethics” investigations (over members making hundreds of $millions on stocks)?
          Isn’t that a perfect cover for them to sell before they crash it?

        • MCH says:

          Really… shucks, I missed it. :(

        • Wisdom Seeker says:

          Andy – read the fine print – they aren’t selling their stock market exposure, they’re just converting from individually traded stocks to index ETFs. Which, sadly, they can also influence.

          Anyway, they’re only threatening a crash so that Biden will have to reappoint them if he wants to maintain control. No doubt there will be a quiet deal done.

      • MCH says:

        @Andy

        Sorry for the double.

        It’s perfectly ethical, and legal. Hell, members of congress does it, so why shouldn’t members of the Fed get a piece of the action. I mean do you see anyone talking about Nancy or investigating her. And besides, I think Wolf already wrote about it at some point, not a full article, but I thought there was a mention.

    • drifterprof says:

      Careful though. One can get in trouble using that term. In teaching at a two-year college in Colorado, I used the term in an online discussion about fetal development, etc. (in a developmental psychology course).

      My statement was something like: “Yeah, one of my students who was pregnant, would hang around before class smoking cigarettes — WTF?”

      My department Chair somehow found out, and wrote me up for unprofessional behavior.

      • Djreef says:

        WTF!?!

      • TenGallonHat says:

        More like, you were discussing personal student information on a forum. What if there was only one pregnant student during your tenure there? It would be obvious you who you were talking about. I never heard any of my professors talk about their students behind their backs.

        • drifterprof says:

          There were lots of pregnant students. And more that one of them smoked. Discussing a general behavior on a class forum is not “talking behind someone’s back.”

          I’m surprised that you are one of the people that believes in censorship of speech due to political correctness, or anytime anyone feels that they are offended by general comments. That’s the type of think that makes instructors into vanilla, politically correct automatons.

        • drifterprof says:

          Being disciplined had nothing to do with talking behind student’s back or discussing personal information.

          My department chair stated that the non-professional thing I did was using the naughty acronym: “WTF”

        • TenGallonHat says:

          Your “WTF” passed moral judgment on one of your students, in front of other students. You still don’t get it.

          And professors forget their students are their customers!

        • drifterprof says:

          TGH:

          You just don’t get it, do you? The “customer” view of education is what brought education in a lot of places to its current dysfunctional condition in the United States.

          For example, evaluation of professors by student feedback is the major reason why grade inflation has made an “A” what used to be a “C” in many contexts. What administration should do is have the evaluations classified by student category. Evaluations of the top performing 25% of students should have more weight than evaluations of the bottom 25% (those guys sitting in the back of the class who do absolutely nothing, while using their student loan to buy a pickup truck)

          Here is another example of a student “customer”: In a class section on nutrition, I mentioned the cruel way some corporations raised chickens – inside a dark warehouse, never even being able to get out of a small square individual cage. One of my “customer” students complained that I was offending the farmers in the community by discussing this.

          Students as “customers,” in some contexts, get to thinking that they paid for the class, so they cannot fail. Some literally say this: “You can’t fail me because I paid for this course.”

        • phleep says:

          I’m a 37-year (law) prof at a similar school. There is a rule against vulgarity. Note however, the Supreme Court has repeated the the F-word a few times when it is meaningful to explain the facts of a case. I use sporadic tiny bits of vulgar terminology when I deem it adds value or meaning (which could, if I slipped and found myself in a corner, include a certain buoyancy in a class full of young people, I might argue, perhaps, in a last ditch, as common to contemporary culture most everywhere) and is not simply utterly gratuitous or cutting. Your superiors are probably sequestered from any popular culture for decades now, and could be humorless apparatchiks, who knows. But they do have some authority to pass on this. (Yes, you could fight it — you have due process rights.) But I agree with other comments that your singling out an individual student, if identifiable to that student, may be less than best practice. Better to abstract it a little more from that group. That is a modern thing (since I started this) — a sharpened sensitivity to upholding the dignity of whoever walks in the door if possible. Some folks are young, green and not as culturally erudite as we are. As an arm of government I owe people a neutralized and somewhat generous spirit/tone, I believe. Another modern thing (often dubious, not always) is hypersensitivity to being typecast as a member of a perhaps disdained group. Teenagers (and suspended adolescents) are hypersensitive to begin with, just developmentally. This just isn’t a world anymore (outside of the presidency, and not even there, at length) where a 6th grade lunch-room bully can just heedlessly broadcast his insults at anyone’s expense. And the presidency has immunities and exemptions we don’t have.

        • VintageVNvet says:

          This for the leeper:
          Not a ”modern thing at all,” as you say,
          ”That is a modern thing (since I started this) — a sharpened sensitivity to upholding the dignity of whoever walks in the door if possible. ”
          Dad told me many decades ago when I was acting ”receptionist” at his architectural practice:
          “Treat everyone coming in the door as a valued client.” Because he knew very well after ”being there” himself, that some of those folks who came in looking like what we used to call bums were, in fact, just coming in from their yachets in the town harbor to see if they could build their homes, retirement mostly in those days, with dad’s help…
          IIRC, many of those dudes and dudettes who showed up in our office, late 1940s, early ’50s,,, in sweat and diesel/oil stained clothing,,, proceeded to build very very nice homes.
          BEE careful,,, very very careful to whom you refer as ”bums” no matter what the current lingo might allow or even encourage…

        • ChangeMachine says:

          Stating facts has always been controversial.

      • Nemo 300 BLK says:

        I’m not a snowflake and I would sign up for one of your classes.

    • andy says:

      It’s ‘Way Too Fast’, is it not.

  8. Bennie says:

    Don’t forget child tax credits, rent forgiveness, mortgage forgiveness, and student loan debt payment forgiveness. Most of those are still going.

    • Auldyin says:

      @B
      And so is binging on credit card debt from what I’m hearing on the grapevine.
      Now that’s a doosey. Why would folks be using debt to add to this roaring fire of buying into shortages. I’m beginning to get a picture that there must be some kind of inflation psychosis going on here.
      Why would people do that, are they trying to boost the stimmie lifestyle? Kamikasi, beats me.

  9. Anthony A. says:

    Looks like the buying spree is cooling a bit. But Xmas buying season is right around the corner.

    • Paulo says:

      This is how Axios and other mainstream outlets are covering these numbers.

      The U.S. economy is emerging from the pandemic with more well-paying jobs for those who want them, less hunger, less poverty, higher wages, less inequality, and more wealth for everyday Americans.

      Why it matters: None of these outcomes were expected when the pandemic began. All of them are the result of massive government programs.

      My question for our Canadian politicians, (it works for every country). What is the plan for paying down the debt? We have to start sometime, don’t we? Am I missing something about objective reality and physics, that part about perpetual motion machines?

      • COWG says:

        “The U.S. economy is emerging from the pandemic with more well-paying jobs for those who want them, less hunger, less poverty, higher wages, less inequality, and more wealth for everyday Americans.”

        Paulo,

        That would be a WTF eye roll from me as in how is that statement even remotely possible in an economy that is 70% consumer?

        The Canadian govt indeed has a plan for paying down the debt… they call it “ you”…

  10. Jay says:

    This isn’t stimulus money at this point. All that has been spent. This is part of that last bit of the $4.4T Americans cashed out of their homes in the last 12 months from refi’s. Nearly half of all US 1st mortgages were created in the last 12 months. Think about that. The clock is ticking.

    • Djreef says:

      Werd.

    • Depth Charge says:

      It’s still stimulus, too. The PPP loans were the most disgusting of all. Just an outrageously disgusting giveaway to already very wealthy people who went out and bought a bunch of cars, boats, houses and dinners with it. Meanwhile, we’ve got millions of people living on the streets.

      • doug says:

        Plus the extra $ until the end of the year for children. It is a lot of money in aggregate.

      • Candyman says:

        Wrong…PPP kept m shop going.keeping employee off unemployment. As for your belief that someone bought a boat, car..maybe they dud, but….they need to show how the money was spent to be forgiven, and only payroll qualifies. Otherwise, it becomes a loan, not a grant. Must be paid back with interest. Side note, waiting for CPA opinion of the forgivable grant if it is taxable as income.

        • Depth Charge says:

          You, Candyman, are probably an outlier given the stories we’ve heard about the PPP ripoff. I am happy it worked for you and your business. And there’s no reason for you to take offense if you did the right thing, because you are not who I am speaking of.

        • RightNYer says:

          Candyman, the issue with the PPP loans was that Congress didn’t require it’s recipients to demonstrate any income was lost. So jewelry stores and accounting firms whose business was never better qualified just like the mom/pop restaurant that was forcibly shut down.

      • Random guy 62 says:

        There are plenty of stories of abuse because they stoke outrage. The program was far from perfect, but it kept a lot of people employed at our company during 2020.

        Characterizing things as all black or white is a big problem in this world. No room for gray area?

    • ru82 says:

      Hi Jay. Good info. I also read that the is more untapped equity in housing then ever before.

      I read one thesis is that untapping of home equity could help propel spending for the next year or so even as stimulus ends? Mark Hanson thinks there will be a lot of companies offering new services on how to tap the 23 trillion U.S. home owners now have sitting in Home Equity. This is Marks opinion:

      “The present $23 TRILLION in HE is so massive, timely, and opportunistic – 100%+ larger than in 2007 – it will soon be the central focus for homeowners; pure-play mortgage and housing companies; all directly and indirectly related companies and investors; and law makers and regulators, alike.

      In fact, Black Knight recently projected…”The average homeowner could now tap $153,000 in equity, up $16,000 from the end of 2020’s Q4. Overall mortgage debt is now only 48 percent of associated home values nationwide, the lowest percentage since at least 2005.”

      Locked-in equity” is ‘the’ problem AND opportunity of the post-COVID era. With $23 Trillion in home equity vs $11 Trillion at peak bubble 2007

      So, adding rocket fuel to the $23 Trillion in HE scenario is the credit box is about to blow open like after 9-11 led by the Biden Admin, GSE’s, and HUD. Now that the Admin fully controls the GSE’s and FHA and will pressure portfolio lenders to fall in line using COVID, ‘financial inclusion and equity”, and the good ol’ “the government already owns 95% of the risk” mantra as cover, there are few barriers left to a mass home equity extraction cycle event.

      Think about that for a moment…$23 TRILLION in untapped home equity plus a credit box effectively as loose as 2002 to 2006. This adds up to an impending equity withdrawal super cycle that will make 2002 to 2006 look tame by comparison.”

  11. MCH says:

    You know Wolf, you should add a Big Mac index or it’s equivalent as a function of time. Span it out over 50 years, close enough considering the Big Mac was created in the late 60s, it’ll give you a decent measure of inflation over time and then just stick that up there with pretty much every post you have. (except the ones about China)

    It would be an easy reminder for the reader of how the value of the dollar has changed over time. (I suppose you could do it with a package of cigarettes, but there you’d have to account for all the taxes as well as the supply demand shifts over time.

    If you think about how much value $2000 was in 1971 compared to now, it’s a night and day difference. I wonder how people would react if they saw that chart everyday while getting their free stimmy…. although I suppose I’m making an assumption that they are able to read a chart like that and divine its meaning and the related impact in the first place.

    • Douglas James says:

      During a brief ‘leave’ [authorized!] following Air Force basic training, I purchased a new 1972 BMW 2002, silver, manual transmission, sunroof and standard vinyl interior, from the dealer in Portland. Price of this entry-level high performance two-door sedan including radio and heater? $3,745.00.

      2021/2022 entry model that brand today…fully 10x that! May be that an Airman 1st class can buy that on the current salary, or, perhaps not?

      • Citizen says:

        Yes, but if you had held onto it you’d be in the green;)

        What a sweet car! Manual….AND a radio with the stain resistant vinyl!?!? Beautiful!

        It reminds me of older guys telling me the difference between the boring regular version and something like the Hemi performance pack that made it a monster muscle car and collector item now … was like $400!

    • Wolf Richter says:

      I have the WOLF STREET F-150 and Camry index, hahaha

      Going to get updated with 2022 model year prices pretty soon

      • MCH says:

        Yes, those have hedonic quality adjustments. Cause the 1989 Camry and F150 are nowhere near as hedonistic as the cars we got today.

        The ones today have Hybrid mode, bluetooth capabilities, standard airbags, and so many other things. Improvements out the wazoo.

        On the other hand, the Big Mac is a true measure of value (just like a 16 oz bar of gold), no hedonism there at all. Just good old beef patties, sesame seed buns, lettuce, tomatoes, onion, pickles, condiments, and some cheese. A true measure of inflation. (just like gold… unless you got the gold out of a vault in China somewhere, then you better get it chemically analyzed)

        :P

        • Patrick says:

          I like the idea but you have to get the commercial right (and sing it for extra points)!

          “Two all beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun”

        • BuySome says:

          Not the same buns, meat held in a steamer cabinet, and who the hell likes their lettuce nuked. Tastes like shite compared to the originals. But more important, would Wolf need to substitute Fish Fillet charts on Fridays to keep in line with these 60’s origins?

        • VintageVNvet says:

          Nope, BM just that these days compared with the original:
          One of the very few concepts of which I am very familiar is the very clear and very evil degradation of almost every ”meat”…
          Spent many years of my youth, and then a couple years many decades later raising actual beef animals, and can testify with accuracy about the very clear delta between the beef, pork, and even chickens of the 1940s and 50s, and these days, though some are coming back to the standards of those long ago decades.
          Surely still buying some beef today because of loving it from childhood,,, but very very carefully as opposed to ”back in the day” when every market, not just the meat market, had good clean and healthy meat…
          Just think about how the ”foot” soldiers on both sides in the ”war of northern aggression” were able to walk from Atlanta to Nashville.
          Hint: it was not because they were ”woke”… eh

      • Yort says:

        Wolf – looking at your F-150 XLT chart, I find it interesting that with my own small fleet of personal and business trucks, the difficulty in servicing them myself is a close match to the cost increase per year chart you posted. The difficulty started to increase quick in about 2011, and my 2020 is a WTH feeling popping the hood in terms of ECM count and “miles” of electrical wiring, number of sensors, plastic parts, lack of space, difficulty getting even reaching basic components, etc. Yet my 1949 and 1994 trucks are so simple, even a caveman could fix them, plus the insurance is 1/5 the cost of the 2020 model.

        So not only are the purchase price increasing fast on new “loaded” trucks, the service cost/difficulty is increasing fast too, along with insurance, etc…

        • Brant Lee says:

          Maybe Cuba is better off than the rest of us. They still have those 1950s Chevys looking far better than anything we drive and still rolling down the road. If we get stuck with 2020 models for 70 years here in the states, that ain’t happening.

        • Trailer Trash says:

          My plow truck is an unregistered 1995 Chevy. I’m seriously considering whether it is a candidate for a complete restoration and put it back on the road. Yes the throttle body injection is “primative” but it has been utterly reliable down to -20F.

          New parts for those trucks are easy to find because they sold millions of them. It would be the same for Fords as well.

        • El Katz says:

          @Yort:

          The insurance costs on the 2020 truck are directly proportional to the complexity you outline in your post. The F150 is also aluminum now… and the cost to repair aluminum is higher and not all shops are equipped (nor qualified) to repair them.

        • Person X says:

          I think it will be hilarious when all the rednecks change their tune about EV’s because they are as fast as Porsche Turbo’s and can tow a house.

          Plus every business will buy them because the maintenance will be drastically less and they might even last for 500,000 or more without any real issues. We’ll see about that but it’s coming.

          The cost of them is absurd of course but wait until they drop like flat screen tv’s. The auto industry is in trouble I think and all the service and parts places are going to go under unless they can do something with maybe modifying/updating these models that will last a million miles. But soon a Tesla or what’s coming from Benz etc. that will be much better will cost you $10K used and still have 700K useful miles left.

    • Trailer Trash says:

      ” how much value $2000 was in 1971 compared to now”

      It was most of the way towards the cost of a new car I bought in 1973.

      Recently, I sent $2000 to my mom to pay HALF the cost of her hearing aids.

    • Realist says:

      A big mac index coupled with an index over average joe’s wages in the same chart would be interesting.

      • Wisdom Seeker says:

        Big Mac to minimum wage ratio is the thing here.

        How many Big Macs does a McDonalds min-wage worker earn in an hour?

        BTW I did look this up a month or so ago and pretty much everything that was sold in 1971 costs 10-50x more today. Put another way, the 2021 dollar has lost 90-98% of its 1971 value.

  12. WES says:

    Getting less now costs more!

  13. DawnsEarlyLight says:

    Beware of flood damaged vehicles, and safeguard your vehicles from part thieves!

    • Swamp Creature says:

      I rented a flood vehicle from Enterprise Rent-a Car. Smelled like mildew,

  14. Old School says:

    Total retail sales up $100 billion, Fed buying $120 billion of assets, government running $300 billion per month deficits. We are addicted to it now.

    You know that system is broken when Powell can make $4 Trillion dollar decisions and a few in Congress can spend $4 – $5 Trillion as economic relief.

    • MCH says:

      If you can conjure it up, I can spend it. That’s the combination of the Fed and Congress for you.

      Free assets… SPEND AWAY…

      I wish Congress would appropriate a few billion my way… I’ll take $3B, it’s less than 0.1% of what they want to put in their newest deal. No one will miss it.

  15. drifterprof says:

    Reading Ray Dalio was informative about how debt crises seem to be inevitable in human societies. This began with the institutional management of debt in organized societies.

    The crucial issue is how a debt crisis is handled. Some sectors have to take a hit, and it’s best to make adjustments that support responsible people (at which United States is extremely, perhaps somewhat purposefully incompetent).

    The current shotgun approach to a debt crisis — creating MORE debt by randomly spewing trillions — would be ROFL funny if it wasn’t so scary.

    • Trailer Trash says:

      Thousands of years ago “primative” societies use the debt jubilee to clear the books, especially when a new King took over. Michael Hudson has written extensively on this topic.

      Maybe Mr Richter could interview Professor Hudson, who still does many interviews each year.

      • Wolf Richter says:

        Trailer Trash,

        Funny how people fantasize about the good old days thousands of years ago.

        In the US, there is already a well-functioning system for debt forgiveness under the US bankruptcy code. The court decides what the debtor pays and what the creditor loses — under the rule of law, case by case, when there are no other options left.

        Sometimes the government or the Fed steps in and bails out the creditors, at taxpayers’ expense, shifting wealth from taxpayers to those that got bailed out, and that should be a crime and those officials should rot in jail for the rest of their lives.

        You see, in modern times, every debt is someone else’s asset. So a blanket debt jubilee of the type you seem to be longing for wipes out those assets (banks, pension funds, bond funds, credit unions, etc.). It’ll all just collapse and go away, and you can forget about your credit card working or a grocery store being open or the lights being on or being able to post comments on the internet.

        This entire discussion of debt jubilees is idiotic. And people who promote this garbage are braindead. They should go study the bankruptcy code instead.

  16. DR DOOM says:

    We are a booming! We just need some more stemmie to keep this Keynesian Boom Train on the rails along with another round of jabs. What the hay,just jury rig your own portable IV drip bag above your head with the jab juice in the bag for some real freedom while spending more stemmie.

    • MonkeyBusiness says:

      Our handsome governor in California just sent out more stimulus checks to celebrate his victory. My crystal ball says that the state will have to resort to IOUs once again as soon as two years from now.

      Murica!!! Best country on earth!!!

      • drifterprof says:

        Who sucks the hardest on the federal aid teat in terms of net federal funding per resident? Not California, which is in the least sucking ten states. Many of the deepest fed aid teat suckers in the good ol’ southern Bubba states:

        10 states with the most federal funding per resident:
        Virginia ($10,301)
        Kentucky ($9,145)
        New Mexico ($8,692)
        West Virginia ($7,283)
        Alaska ($7,048)
        Mississippi ($6,880)
        Alabama ($6,694)
        Maryland ($6,035)
        Maine ($5,572)
        Hawaii ($5,270)

        • AdamSmith says:

          I notice you do not mention student loans which is the biggest scam I have ever seen….

          The concept of tenured professor is so rare other than in government colleges like the community college system in California. A tenured professor can make upt to 250K and i checked state data base showing individual professors payroll and found this to be true.

          Are you one of those drifting adjuncts????

        • Nacho Bigly Libre says:

          Oh, the states from where the jobs were outsourced with atrocious trade deals? States where industries were shut down with regulations?

        • drifterprof says:

          Adam Smith: “The concept of tenured professor is so rare other than in government colleges like the community college system in California.”

          Hey, what planet do you live on?

          Note that:

          1. I’ve experienced teaching at institutions where too many student loans were a scam – a scam by the administration as well as an individual student scam (or student wishful thinking). At one institution the administration milked the federal aid system by importing foreign sports players (soccer, etc.), and using them to calculate the proportion of Latinos, thus qualifying for huge Latino serving institution aid.

          2. The tenure system, while once prevalent almost everywhere at quality higher education systems, has been declining over the years, and I believe that’s a good thing. I was never tenured, because I switched career from software engineering in middle age, and never quite fit into the kiss-ass-power-trip ordeal needed to navigate the tenure track process.

        • KDMaz says:

          Haha, Virginia being southern – that’s good. It hasn’t been southern since the 1860’s. A lot of Virginia is a part of the DC metro.

        • Shiloh1 says:

          Solution: end federal income tax.

        • COWG says:

          DP,

          Federal aid comes in many flavors…

          Welfare, Medicare / aid, transportation, etc…

          If you will note, most of those states have one large urban area with the rest of the state being more rural and poorer…

          Just a causal sidebar…

        • DR DOOM says:

          Drifterprof: Relocate the Government to the middle of America and you would see just the opposite result. Distribution of resources in an Empire are always concentrated the most around the power centers and geography that supports it. It’s a Wealth Suction Beast with parasites swarming around like maggots to carrion. Your kind of thinking of that there is an endemic type of Georaphic Darwinisum operating is the type of thinking that has been formed by a political system that wants the Republic to fall. A growing number of politicians in their effort to gain power have willfully or ignorantly embraced the idea of American Balkinazition. The Empire is the problem not a person living in backwater USA with no power. That person ,God bless them , always shows up when the rest of the Enlightend States need them to fight the Empire Wars. Think about it.

        • MonkeyBusiness says:

          It’s not about sucking on teats. Americans really have short memories. It’s about mismanagement of finances. During the good times, it’s better for the state to save as much money as possible. Remember 2009? Of course not, but after the recession, the state’s coffer was so empty it had to issue IOUs.

  17. Mendocino Coast says:

    Good Post Wolf !
    I don’t however expect anything New to happen next, just more of the same . I doubt Powell would be upset should he no longer head the Fed walking away with what ? some 5o $ Million Dollars after all the stimulation of the economy .
    Do you think any next in line at the Fed taking over shall be any different ? or just more of the same. Now that’s Job I would not want even if I knew what I was doing lol No thanks
    Keep up the Great Updates

    • Depth Charge says:

      The system is on the verge of collapse. It can’t go on much longer.

      • BuySome says:

        Unacceptable! A collapse involves straight lines, and Wolf has no intention of spending four years of his remaining life in art school classes learning how to draw those, even if they forgive student loans!!

        • MCH says:

          In the long run, nothing goes to heck in a straight line. 🤪

          Now where did I hear that one from…

      • COWG says:

        DC,

        Change that to “ some systems” are on the verge of collapse and and I’m with you…

        Which ones are the ones we have to try to figure out and take advantage of…

        Give it a year or so, and we’ll know who drank the koolaid…

      • MCH says:

        Is it too late to get a bunker and fill it up with food, water, and ammo?

        Heheh, that’s what the rich does…

      • David Hall says:

        Does collapse mean they will raise the rent again? The price of food and energy, what happens there? Any discounts on vehicles, or bidding contests?

        Venezuela collapsed in Marxism. That collapse saw inflation, shortages, price controls etc. Poverty increased. The price of food is out of control. Party bosses grew fat. 2021 inflation is estimated as between 1000% to 3000% in Venezuela.

        They are supposed to pay people for doing useful tasks, not for staying home and doing nothing all day.

  18. Old School says:

    What comes next after blow out retail sales? If you believe economic research once you reach debt saturation what comes next is a stagnant no growth economy.

  19. fizee says:

    Interesting charts thanks Wolf but what about the other side of the coin (remuneration)? I worked 50 years ago for $6/day stacking in a bottle yard. A few years later I was making $20/day mopping floors. At some time I think in the 1980s $100/day knocking buildings down. Wages seemed to be going up quickly then but the increases didnt last long. My most recent job earlier this year paid $600/day plus expenses WTF but my qualifications had improved. I live in the land down under.

  20. Richard Hoard says:

    great

  21. historicus says:

    Spikes dont spike forever?

    Chart central bank holdings and stock indices …..note the spiking and the correlation.

  22. CJH says:

    There are lies, damned lies and statistics. I’m in the deflation camp because the private debt is sucking up all disposable income.

  23. Roselle says:

    Free Speech? Ha, LOL, etc..

  24. Brant Lee says:

    DIY is slowing down, guess a lot of people actually had to go back to their real job. Lumber prices have fallen back to almost pre-pandemic levels because?? It’s not profitable to ship North American logs to China for processing or they would dam well do it? I’m surprised no corporation has built a sawmill ship that could float far enough off the west coast to use Chinese $1hr labor.

    Perhaps there is now a glut of lumber that has finally overcome the home building spree? Paying 3x material prices over the last 18 months and seeing people do it shows how stupid things can get. Maybe the bottom will fall out of vehicle prices likewise. I hope. I hope.

  25. David C says:

    Is there a way to track how much of the stuff bought in this retail extravaganza ends up donated to Goodwill, Salvation Army or just thrown away ?

    • Bobber says:

      I know a lot of the stimulus turned into plastic garbage.

      I just read in Consumer Reports that only 8% of plastics you throw in the recycling bin get recycled. The whole concept of recycling is a mirage put on by the plastics industry, beverage companies, etc. They want consumers to feel good about the destruction. They say the only thing that has a chance of getting recycled are items marked with a 1 or 2 in the triangle.

      Of course, cities don’t want to mention this because they want people to live under the same mirage, so they can take credit for work they aren’t doing.

      • Person X says:

        Yet another thing corporations and big oil want to keep us from understanding so we won’t demand that they stop using oil and make biodegradable alternatives. It’s ridiculous that Amazon has not made a point to reshape the shipping container industry with more responsible packaging….. and bottled water should just be illegal, give us decent public water for __’s sake!

        • Xavier Caveat says:

          When I was a kid, public drinking fountains were everywhere in stores, schools, you name it.

          I think 97% of them went away.

        • Bobber says:

          The FDA should be looking at this. They say all the plastic trash, much of which is incinerated, is getting into air, water, food, and our bodies.

        • El Katz says:

          Public drinking fountains were mostly closed down due to them having lead in the internals (solder, etc.,) and it was cheaper to turn them off than replace them.

  26. riverwind says:

    The slowing down of new vehicles sales is driven by supply shortage due to chips. If chips is abundant, we’d still be looking at ~16-17M SAAR US new vehicle sales, and likely in next couple of years too

  27. SocalJim says:

    There is more to the retail sales spike than free money. People expect inflation will continue for an extended period, so they are buying good sooner and stocking up when possible.

    Same with houses. People keep buying them for the same reason … they expect inflation will last. I am seeing new lows in inventory.

    Inflation with slowing growth will be with us for years. The stock market has finally taken notice.

    • Xavier Caveat says:

      They aren’t making any more tired 1963 3/2 (was a 2/1 before a remodel in the 80’s) single family homes in SoCal.

      I can see why people are paying a million bucks…

  28. Citizen AllenM says:

    Inflation is making me wait….for it to show up in long term trends.

    Right now we live in teh Covid market, and sanity has flown the coop again. Sigh. The blow off is fading and we get the hangover next. Meanwhile galloping inflation has dropped the price of silver from 29.40 to 22.40- hope everyone likes the 22% discount- but oh wait, physical is in shortage- only thanks to that evil stimulus.

    Temporary effects are not permanent. After all, the housing crisis passed, the next social security crisis is not yet upon us, and the Chinese housing crisis has not hit us, well, yet.

    Lunch was good. All is mostly well.

    As for this being a total catastrophe, the one thing 2008 taught me was the system has a lot of resilience.

    Someday this war’s gonna end…

    • NotDeadYet says:

      Thank you for your post, Citizen Allen M… Common sense is the most rare and precious asset these days.

  29. Swamp Creature says:

    What’ s going on with Silver??? I don’t see any spike there. Dropped to $22.90/ounce. All the lemmings that went into preciuos metals as a hedge against inflation are getting their clock cleaned. I don’t own any precious metals.

    • Depth Charge says:

      I own a small amount, maybe 2% of my net worth at this point. It was 5% a while ago but I stopped buying them but still save money and grow my net worth. I could see the writing on the wall – precious metals don’t respond like they did historically. A lot of the buyers now fancy e-tulips.

      • RightNYer says:

        They will fancy precious metals again when the system completely collapses.

    • Old School says:

      Silver is interesting animal due to dual use as an industrial commodity and it’s use as a monetary store of value. Makes it very volatile when people rush in for store of value. Might languish here or be $75 in a panic.

  30. ru82 says:

    I expected some of those charts to spike and drop back down to the trend. Looking at the Food / Beverage and then the Restaurant/ bar charts. Are people just glutenous on their food spending? …or maybe they are buying the same amount of food but prices are higher and thus there is not going to be a peak but the chart keeps going higher?

    Maybe some of those WTF increases are permanent because of inflation?

  31. DanS86 says:

    Illinois taxes cannabis cartridges at a little over 39%! What are the taxes in other cannabis states?

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