A Mess: Retail Inventory Shortages in Charts, Just in Time for Holiday Selling Season

Stimulus-fueled blow-off demand spike meets messed-up supply and transportation chaos.

By Wolf Richter for WOLF STREET.

Retailers are trying to stock up for the holiday selling season. But they’re facing all kinds of shortages, supply snags, transportation chaos, and surging prices. And overall and supply has remained at record lows for four months in a row.

Stimulus-fueled retail sales started spiking last year, culminating in a mind-blowing free-money blow-off top in April. In the months since then, retail sales have tapered off  a wee bit but remained close to the tippy-top of this free-money blow-off spike.

The inventory-sales ratio (inventories divided by sales, a standard metric of supply, which cancels out the impact of inflation) started collapsing last year. In May this year, it hit an all-time low in the data going back to 1992. In July, according to the Commerce Department on Thursday, the inventory-sales ratio ticked up a tiny bit, as a result of a small decline in retail sales in July from the free-money blow-off spike, but remained near the lowest levels in the data.

The 2008 spike occurred when retail sales suddenly plunged as auto sales collapsed after the Lehman bankruptcy. The second spike occurred in March and April 2020 when retail sales collapsed during the lockdowns.

A ratio of 1 says that the retailer has enough goods in inventory for one month of sales at the current rate of sales – in other words, 30 days’ supply. A ratio of 2 means 60 days’ supply.

The overall inventory-sales ratio of 1.1 in July means roughly 33 days’ supply, when 40 to 45 days’ supply was normal before the pandemic.

In dollar terms, overall inventories ended July at $603 billion, unchanged since April, and down 9.3% from two years ago. But these dollar-inventories have been inflated by higher product costs due to rampant inflation up the supply chains, including used-vehicle wholesale prices that soared by 24% year-over-year in July and nearly 40% from two years ago, and by a shift to higher-end vehicles among new car dealers.

Catastrophic shortages at auto dealers.

Inventories at new and used vehicle dealers and parts stores normally account for over one-third of total retail inventories. In terms of the number of vehicles, not dollars, retail sales and inventories have bounced around in the same range for 25 years. This is not exactly a growth industry.

But this year, inventories collapsed due to the semiconductor shortage that has triggered rotating shutdowns of assembly plants in the US and around the globe, while strong demand in March and April depleted inventories.

For the three months of May, June, and July, inventories at auto dealers were stuck at around $153 billion, a level first seen in 2004, when vehicles were a lot cheaper than today – for example, according to the WOLF STREET “F-150 & Camry Price Index,” the MSRP of the F-150 XLT was $22,000 in 2004 and $35,000 in 2021.

During the months following the Lehman bankruptcy, new vehicle sales collapsed, and the country was suddenly awash in inventory that suddenly couldn’t be sold. GM and Chrysler and a bunch of component makers filed for bankruptcy.

In this crisis, the opposite has taken place: Fueled by $4 trillion in money-printing and by $5 trillion in government deficit spending, retail demand surged, even as supply was constrained first by Covid issues in the manufacturing sector, then by the semiconductor shortage and other shortages in supplies and components.

And the inventory-sales ratio for auto dealers and parts stores – which cancels out the impact of price increases – dropped to 1.14 in May, the lowest level in the data going back to 1992. Since May, sales have plunged as dealers have run out of inventory to sell. The drop in unit sales over the period caused the inventory-sales ratio to tick up just a bit by July to 1.22, meaning about 37 days’ supply, at those depressed sales!

Clothing and accessory stores, in bad shape for the holiday sales.

In March and April 2020, as sales collapsed, unsold inventory piled up to a record $54 billion. And the inventory-sales ratio spiked to 19 during that time.

Then clothing sales recovered and ate up the excess inventory, and then supply issues started cropping up and have worsened. And sales started hitting records, and currently are up 15% from two years ago.

In dollar terms, inventories have been stuck near the pandemic low, in July at $48 billion. But surging sales caused the inventory-sales ratio to plunge to a record low in June and stay there in July:

Food and beverage stores, tight.

Supermarkets have recovered from the empty-shelves phenomenon in March and April 2020, caused by panic buying and a shift in consumption from work and restaurants to the home.

But demand remains higher than before the pandemic, as the shifts in consumption have continued. Food and beverage stores have stocked up, and prices have increased too, and in dollar terms, inventories rose to a record $55 billion in July.

But given the surge in sales compared to normal times – sales were up 15% from two years ago while inventories were up just 6.5% — the inventory-sales ratio remained stuck in the same low range since August 2020. Shoppers have seen this play out as their stores, now generally reasonably well stocked, suddenly run out of some items that they’d run out before:

General merchandise stores, still near record lows.

Inventories in dollar terms, after the empty shelves phase in the spring last year – rebounded and then reached a new record in June, and rose further in July to $87 billion. But sales at these stores – they include Walmart, Costco, Target, etc. – are up 18% from two years ago, which left the inventory-sales ratio near record lows.

The long-term trend is marked by ever stricter lean inventories strategies that have reduced supply from 60 days in 2000 to about 40 days before the pandemic:

Building materials and garden supply stores, supply back to old normal as sales drop.

In dollar terms, inventories have been rising from record to record, but sales spiked too. By stimulus-miracle March, sales had exploded nearly 40% from March 2019, leaving retailers with very tight inventories. Since March, however, sales have fallen off -9% as the DIY boom is fading, and inventories have continued to rise, reaching a record of $68 billion in July.

As a result of declining sales and rising inventories, the inventory-sales ratio has rebounded from record lows to a level that in July was close to the old normal range:

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  100 comments for “A Mess: Retail Inventory Shortages in Charts, Just in Time for Holiday Selling Season

  1. The investment banks are having no problem accumulating stocks and they are going to sell them to the muppets. Santa Claus Rally!

    • RH says:

      The economy is an interconnected web and the Chinese portion of that web is coming undone. Thus, I am not sure which foreign and US companies may have problems, aside from those who bought securities of or loaned to Chinese RE developers: e.g., if they paid a Chinese factory for goods that the tightening supply issues or financial issues of its parent company/CCP-owners cause not to be produced or sold to others to lighten the financial burden on or get funds to the parent/CCP-owners. FYI: see analysis of Dr. Michael Burry’s twitter feed as to Chinese commercial paper as to certain issues involving non-US companies.

      On another, current subject, my ongoing schadenfreude: I am truly enjoying watching news networks asking Chinese economists and business persons, who are still physically in mainland China(!), and on air, questions about Evergrande and current CCP economic policies, which questions if answered honestly, may cause get the CCP to do nasty things to those economists/businessmen! One economist (after nervously glancing sideways) managed to work in the word “survival” twice into her understandably evasive answer and if her Morse code was rusty, she might have been blinking in sequence to message the media puppet-head: “Bi__h! Are you trying to get me killed!”

      If that clueless media puppet-head asked the same things of someone in Russia, no doubt she would have been told about how very wonderful Putin was and how he had the strength of Hercules flowing from his Apollonian physique. (Translation: “please, please do not hurt me, Mr. Putin. I know what is done to those who dissent.”)

      In American, I can opine that things in Chinese RE are going to be found to be worse than most can phantom, because the RE developers, the local CCP gangsters, mid-level CCP gangsters, CCP bankers, US banksters, etc., etc., have so much motive to and practice in misleading others. Reports conflict, but it apparently represented nearly 1/3 of Chinese GDP and nearly 1/3 of the total savings of the Chinese people, which may have been taxed (by local CCP gangsters) or pilfered away, effectively. Thus, those Chinese victims might become upset if they find out that most of the worth of their savings is now gone.

      • Ronin says:

        Real question is how much Chinese debt is in US pensions? I bet Calpers has plenty seeing as it was advised by a CCP member. This could be the needle that has millions in the streets wanting blood – and many already do.

      • roddy6667 says:

        You believe a lot of things about China. I don’t know where you get your facts. Most of what you are saying here is simply, unequivocally not true. After 7 years of living in China, it still irks me how the American media tries to smear China in every article. It is easy to get away with. Americans don’t travel or read. They will never know.

  2. Lawefa says:

    Already planning a vacation with little to no presents for the kids this year. I know the airlines and hotels are open for business. I’m done buy junk from China for Christmas. Actually, I’m really looking forward to a family vacation this Christmas. Thanks for the article and factual journalism Wolf.

    • Ridgetop says:

      Lawefa,
      Great idea! We should be all doing that! This world does not need any more plastic junk from China filling our dumps, and you get closer ties family to boot.

      • Cashboy says:

        I thought that there are 60 container ships waiting outside LA Port with shipments from China.
        Plenty of Chinese junk coming in time for Xmas by the looks of things.

    • RH says:

      Yeah. Scandinavian upbringing traditions, according to reports that may or may not be accurate, do not habitually involve giving the number of gifts that other countries’ parents give. I admire that, theoretically. It teaches children the value of the dollar.

      Now, the trick is to say no and stick to it. It is not easy when those little tykes look around at the gifts of their friends and then turn their cute eyes and look at you. Their little, adorable eyes seem to convey accusation that you did not buy them as many gifts as other parents buy their kids. LOL

      That is how my house is 45% full of toys, and also the back seat of my car. I also cannot walk into what used to be one bedroom without risking death under a hail of leaning, piled up boxes, so that only half of my living room can be walked through without risking a broken ankle or arm. Still, none of the toys must ever be thrown away, I am told.

      I imagine China’s dictator, Xi, is facing a similar dilemma: to which of his little, crooked, CCP boys and girls does he gift China’s foreign reserves of over $3.2165 trillion reportedly (including its gold, other metals, foreign real estate, and oil reserves), since so many real estate companies will need bailouts from their debts in dollars as the Evergrande and other crises drive down the Chinese RE market. IN 2018, an article in the CCP’s controlled newspaper said “China is underestimating its US$3 trillion dollar debt and this could trigger a financial crisis, says economist.” (Brave economist?)

      Reportedly, a huge portion of China’s real estate sector, not to mention the manufacturing sector hurt by the increasing departures of foreign firms like Samsung and Panasonic, will need to be bailed out. By now, trillions must have been transferred from China into US and other real estate by corrupt, CCP members. However, I doubt that they will sell it and give Xi that money, because those properties are probably part of those CCP members’ “arks of doom, ” i.e., nest eggs in case the Chinese people finally get tired of their massive stealing and start stringing them up.

      With many Chinese now losing their retirement savings, how will Xi split his limited basket of assets? (Of course, the Christmas season should soon increase his foreign currency reserves as so many toys and other purchases are made from Chinese factories.) Will he be able to prevent the collapses.

    • Argus says:

      One of our most enjoyable family Christmases was one where, unplanned, every gift had been handmade by the giver. That was many years ago and I still see these items being used and having pride of place. Simple gifts, lovingly made, leaves more time for contemplation of what Christmas is really about, God’s gift of salvation.

  3. Seneca's cliff says:

    Luckily the most important thing is still at good stocking levels at the grocery stores and retail establishments that I frequent. BEER.

    • Wolf Richter says:

      I agree. Even during the worst moments of the empty shelves phenomenon, beer never ran out. My favorite local brews were always plentiful.

      • anon says:

        Water, barley, yeast, hops. Don’t need China for those.

        • Wisdom Seeker says:

          Need something to hold it in, though. But maybe we still know how to make bottles and cans and cardboard boxes.

          That gets it home from the store. Might want something else to drink it in. So, next question is… where were the WolfStreet mugs made?

        • gwb says:

          I make my own beer. The ingredients are all domestically produced, or come from friendly countries. There is also no sales tax, because everything except the hops and the bottle caps is considered food. I save some money, and greatly reduce my solid waste – the bottles (and, yes, the bottle caps for a while) can be reused. Shipping alcoholic beverages to stores is all about shipping large quantities of liquid and glass – which are heavy. The energy costs of this system will in the long run send prices up. Make your own – bypass the system – “collapse consciously now, and avoid the rush”.

      • Joe Saba says:

        but real qx is for how long
        now that stimi and PPP have ended – with retail sales dropping in 1/2 most places, can they still pay high commercial rents they have?
        seeing more and more – oops they closed shops now
        empty malls – we have Park Mall that is going back to lenders
        big restaurant now serves about 1/3 customers due to lack of workers
        heard they offered DISH WASHER $20 an hour
        holds 500+ – 1/3 full

      • James says:

        Reminds me of the Roman empire had daily handouts of bread and wine for the poor. They knew the only thing worse than being poor is being poor and sober.

        Something tells me our overlords took note.

      • Swamp Creature says:

        The local brews here ain’t worth a s$it. I tried some the other day per Wolf’s recommendation. It was so strong I couldn’t make it through one six pack. I’m back to my Bud Light and Coors Light as a backup.

        • VintageVNvet says:

          Try Stella SC,,, and it also comes as a ”light”,,, both have much better flavor IMO,,, without the heavy hops typical of the IPA and most local brews…
          Funny story, BIL and I drank Busch and it’s ”light” for many years when we were younger and poorer and you could buy a six pack of either for as low as $1.99 on sale.
          Years later we were still at those in spite of much more income, etc.,,,, but when he went to the great music hall in the sky, I began to try every beer, ale, etc., that I came across, and ended up favoring the Stella as my commonly available choice,,, though do enjoy some of the local brews friends favor in NorCal and OR which are very good to excellent.
          WE the Beer drinkers, definitely need some larger WS Mugs to be able to pour it out will a ”full” head…
          24 oz canning jars work just fine for that,, hint hint…

        • Mendocino Coast says:

          I like your post on most everything except this .
          Nothing Personal But
          I think Bud Light and Coors tast like Dog Fir Yuck
          How can you drink the stuff ?
          I wish the Fed Member had to drink it perhaps that might change something ? nothing elce seems to .

  4. Michael Droy says:

    Is some of this the result of the accelerated switch to online purchasing.
    A physical retailer needs a lot of stock to keep all his outlets supplied as well as regional warehouses.
    An online retailer needs just one warehouse. I’d guess 10 days stock instead of 50 days.

    • Old school says:

      It’s so common sense. Decrease supply by paying people not to work, increase demand by handing out free money.

      • Kenny Logouts says:

        Exactly.

        Why try get inflation by QE, when you can just pay people to be idle and buy stuff.

        If 50pc of people sit idle you half supply and increase demand.

        Just like QE and debasement though, this ‘inflation effect’ only works so long.

        In the UK they’re already talking about food supply issues again.

        It’s not great when governments start tinkering in supply and demand so much to find ‘inflation’, that they start to mess up food and energy supply!

    • David Hall says:

      I use Amazon more these days. A high inventory turnover ratio may be more efficient. 20 years ago the Internet was smaller. Global Crossing was part of the fiber optics cable infrastructure build out. We did not have WiFi or smart phones yet. There was less AI. Now I have facial recognition for my phone. It uses lidar that can sense the shape of my face in the dark. Good things are coming. Knowledge is increased.

      • Mark says:

        “Now I have facial recognition for my phone. It uses lidar that can sense the shape of my face in the dark. Good things are coming. Knowledge is increased.”

        That’s what China is telling it’s people about the social terror network that controls everyone through facial recognition …….

        Our government is in glee to imitate them.

    • Old School says:

      Hobby Lobby said cost to ship some items was more than the cost of the item.

  5. DawnsEarlyLight says:

    What if a good percentage of these ‘in high demand’ shipments that are ‘sitting , stuck in port/containers’, are never fulfilled on the ‘sell’ side? Won’t this mess up the supply/transportation/storage side of historically normally reoccurring items?

    • Joe Saba says:

      in 2020 our plumbing supply house had to caravan 3 trucks to Phoenix weekly to get water heaters – here in Tucson
      his order was 6 weeks late and he used to get 2 loads a month
      now he has water heaters stacked outside(sells 200 month)
      of course 5 price increases in 2021 may be reason – now $600
      then you PVC guys – got order in before another took place on sept 7
      when got confirmation – it was higher than aug. so he called supplier
      oh, we had price increase on sept 1(and another on sept 7 with more to come)

      of course I needed PART for water heater – had to get it shipped once I found it – 10 days later – tenant wasn’t happy – oh well

  6. Petunia says:

    My son was in a Best Buy last week. He said they had a wall of car stereos, over 50, and almost all were sold out. Only two didn’t have sold out labels on them. Lots of empty shelves all over the store and not busy at all.

    • Joe Saba says:

      stuff we don’t need – yah stopped buying that stuff this year
      bezos has enough
      rather buy local – but seems amazon has it when locals do not

      big guys get PRIORITY SHIPPING CONTAINERS for some reason

    • ArtV says:

      Petunia, I read your comments blaming democrats for the passage of NAFTA, (the thread for the SS COLA story) and I’m responding here so that you are sure to see it. This isn’t the first time I’ve read blatant lies with a political leaning from you, and as often as not, you seem to get away with it. I’m surprised Wolf didn’t call you out on this one.
      NAFTA was passed by republicans. The bill was sponsored by a democrat, but it was republicans in both the house and the senate that passed it, despite democrats having a majority in both the house and the senate. Here are some interesting facts for you: Democrats voting against nafta overwhelmed democrats voting for it. 156 dems said NO. 102 dems said YES. Republicans voted overwhelmingly FOR Nafta. 132 of them. How many said no? Not even a third of them–just 43 reps said NO. It was a similar story in the senate: 34 republicans voted YES along with 27 democrats. But a majority of democrats again voted NO–28 of them. Republicans voting NO? Again, not even a third of them–only 10.
      Most people commenting on this site stay away from partisan finger pointing. It’s disappointing that you are unwilling to avoid that, but worse that you do it with complete fabrications.

      • Petunia says:

        ArtV,

        Unfortunately, I am old enough to remember the NAFTA period very clearly. I know the republicans wanted NAFTA, but they were too afraid of the backlash to make it a reality. It was a bad bill for labor and the republicans knew it. So did all the democrats that voted for it. Remember too that Perot was a republican who knew NAFTA was a terrible bill, not just for labor, but for America.

        I was a democrat back then and voted for Bill. I never thought labor would be betrayed by the “liberals,” but now I know better. I call myself a Clinton Republican because Clinton made me a republican.

        NAFTA was a terrible bill and Bill sold it as a job creator for the working class. As a news junkie, I remember his speeches and photo ops well. The guy is still the best liar out there.

        • Wolf Richter says:

          “Giant sucking sound” was the most accurate phrase ever coined.

        • NAFTA didn’t work when corporate America bailed out on the maquiladoras and Mexico, and moved their operations to China. Only now is some of that trade starting to return. Clinton wrote WTO for China and Bush signed it, two weeks after 9/11.

        • Wolf Richter says:

          Ambrose Bierce,

          “NAFTA didn’t work when corporate America bailed out on the maquiladoras and Mexico…”

          Nope, you got that one wrong. Labor costs are lower in Mexico than in China due to systematic wage repression by corrupt local officials, unions, and foreign manufacturers. Foreign manufacturers have continued to build plants in Mexico and have continued to shift production from the US, Europe, and more recently Asia to Mexico.

        • ArtV says:

          “I know the republicans wanted NAFTA, but they were too afraid of the backlash to make it a reality. It was a bad bill for labor and the republicans knew it. ”

          Republicans too afraid? Still the democrats fault? The overwhelming number of republicans voted for it. The overwhelming number of democrats voted against it. It passed the house because 132 republicans voted for it. Only 102 dems voted for it.

          I voted for Ross Perot back then. While I have almost always voted democrat, Clinton seemed slimey to me. I voted for him second term only as a vote against Dole. Though, I will never again vote for a member of the Clinton “dynasty”.

          I believe the majority of politicians in both parties pass laws to benefit the corporatocracy and mostly couldn’t give a hoot about bettering the lives of the “commoners”.

      • Rg says:

        102 Democrats voted “Yes”. Sounds pretty bipartisan to me.

        And yes Ross Perot was totally right.

      • SocalJim says:

        ArtV, that is garbage. Since the Dems controlled both houses, they had total control on which bills reach the floor for a vote. So, the Dems in both the house and senate decided to put the bill up for a vote, and a Dem president signed it.

        Of course, a number of rank and file Dems knew they could get away with a NO vote since their were enough Republicans on board, so they did to save their political neck.

        Fact is Clinton/Gore, Obama/Biden, and Bush/Cheny are the politicians responsible for this trade disaster that has brought America to its knees.

        • ArtV says:

          Pretty big rank and file SocalJim. 156 dems said No. 102 said yes. Where were the rank and file republicans? Barely a quarter of the republicans in the house voted against Nafta. I have no love for the corporate toadies of either party, but Petunia’s original comment from the other thread blamed democrats entirely, and that was simply not the case by a long shot.

    • Apple says:

      Who buys car stereos?

      My 5 year old car didn’t even come with CD player.

      • Paulo says:

        I bought a pretty nice Clarion for $50….from an auto wrecker for cash, wink wink nod. You can get some for $10. We had a nightmare trying to buy a simple am/fm cd player with an docking station for XM. Finally ordered one from Best Buy and it’s not too bad.

        We don’t own a ‘smart phone’ for two reasons. One, they don’t work in the boonies and two, they ruin too many visits and dinners, especially with young people. I guess we won’t buy a new vehicle. :-)

      • Petunia says:

        People with an extensive CD collection who hate spotify.

        • DanR says:

          I have an old car that actually plays CDs. It’s pretty amazing!

          Should I get a newer car with the little orange lights on the side mirrors that glow when a car enters my blind spot?

      • Argus says:

        My 2021 Subaru Forester does and I prefer to play CDs of my choice.

  7. MCH says:

    There is no need to fear, the Fed and the government is here….

    Wait… that doesn’t sound right…

    May be just the Fed is here…. there are no problems that can’t be overcome with a combination of mandates and more printing.

    Look at the bright side, from the inventory/sales chart, the indication is that we won’t be having a Lehman moment any time soon…

    Nyuk nyuk, that’s reserved for China.

    Oh, but wait, since we’re all interconnected… OMG, We’re all doomed, run for your lives. The inflation is coming, the inflation is coming.

  8. Ridgetop says:

    My brother in-law is a close friend with a owner of a Toyota and Chevrolet dealership in Northern California. The dealer just had a meeting with the factory reps, and they are telling them auto shipments should be back to normal by January 2022, in 3 1/2 months.
    He also says that if Toyota says so you can count on it.

    I also wonder how much of a backlog of new assembled trucks, sans their chips, are sitting out there ready to go. Will we have a sudden over supply once the semiconductors arrive?

    Get ready to deal boys and girls !

    • Wolf Richter says:

      So just responding in theory… Shipment being “back to normal” means that the current backlog continues because those normal shipments will just cover normal demand and not also the backlog. It would require shipments above normal to catch up and make up for the shipments below normal.

      The other option is a big drop in demand, and that would help the entire industry to catch up.

      • Joe Saba says:

        most excellent – I bought big truck to pull 38′ trailer
        decided we don’t like trailer travel and selling both

        gotta love 24% increase in value
        of course what it REALLY MEANS is so much stimi $$ have flooded market that the FIAT DEVALUATION IS running hot and heavy for 2020-2021 that we LOST PURCHASING POWER OF 24%

        • Lawefa says:

          Been wanting to buy another suburban for road trips with the kids but can’t stomach the 30% increase in price recently. I choose to sit in the sides with this fiasco. Should they drop, I’ll be ready capitalize on the dropped prices. I’m not holding out hope for price drops at any point with all this thirst doe the continued “stupid buying” that is going on with junk expendables.

        • VintageVNvet says:

          This for L:
          Needed a new pick up in 07 due to ”issues” FKA problems with the one I used for work, driving approx. 50K miles per year,,, got a very nice ”classic” chevy ext cab 1500 deluxe for about 25% off MSRP..
          Told the sales mgr that I was also in mkt for a 3/4T 4×4 for the farm: he called me a while later to report he had what I wanted… for about 33% off…
          Stalled and then went and made the deal for a bit less than 50% off MSRP…
          Spouse and I went to dealer, and I coached her to jump up and start out the door when they tried to modify the deal, which they did, and we did,,, and they begged us to ”finance” so they could make SOME profit,,, which we did,,, for 90 days before we paid it off….
          Win Win Wins coming soon,,, but you will need to be patient, and not just bend over for any of the ”apparent” DEALS…

      • Ridgetop says:

        Good points.
        My WAG is that they would not be able ship quantities above normal, thinking is that they could not receive above normal chip shipments?

        Oh, big drop in demand would be nice, I would take advantage of that.

      • MCH says:

        There is an easy remedy for the demand problem. It’s so easy that it can be found in any basic economic text books.

        That remedy is being applied with a vengeance right now, and things will balance out soon enough.

        When one side of the boat gets overloaded.. well, there might be a capsize somewhere in the future.

    • Seneca’s Cliff says:

      I have this feeling that 10 years from now people will still be riding their mule in to the car dealer every month to see if the new cars have arrived yet.

      • Wisdom Seeker says:

        Neofeudalism won’t work like that. You won’t be able to afford to feed the mule – the elites will own all the land. In the original feudalism there was tons of land but nowadays we have tons of people instead.

        So you’ll have a beaten-up bicycle with bumpy wooden wheels that you made yourself from scrap wood. You’ll be lucky to have some gears and a chain that you keep running with some old tools you managed to stash.

        And only the elites will be driving the new cars.

  9. COWG says:

    Furthermore, who you going to sell them to…

    Are the people who bought recently going to be happy being upside down in value by 50% ? Roll that $15000 you’ve just lost into a new 10 year loan? I guess we’ll see…

    If demand falls, prudent people over the last couple of years may buy cheaper, but I think when the money is in the rear view mirror so will be the buyers…

    I could buy whatever I want, but I don’t want anything new… I don’t like all the crappy tech that doesn’t work half the time, the nanny software, the tattletale software, insurance rates and all the damn commercials telling me if I’m not metro sexual I’m missing out…

    That said, I’m hoping used cars hit the skids, but since these people are in so deep, it may take a while to clear out…

    I also don’t think the dealers are going to deal much initially so they can unload the overpriced used they’ve paid for…

    • Joe Saba says:

      insurance rates
      well now that is interesting as I spoke with insurance agent this week about rental property – had fire in one fall 2020 and figured out owner is under-insured
      so with SKYROCKETING VALUES – agent said we have to be 100% insured or company could deny claim
      I got quote upping coverage $50k on each building(3 of them) and insurance rate(just for property value) went from $1500 to $2400

      ain’t biden economy great

    • Swamp Creature says:

      There will be a boom in 3rd party enterprises that remove all the spyware, useless gadgets and garbage that comes with new cars today. Most people don’t want this crap. I sure don’t. More things to go wrong and require expensive repairs that only the dealer can do. Insurance companies want to have this survielence bundled with the car so they can have an excuse to raise your rates if you drive more than your report on their surveys of mileage. One major accident with these 40K loaded vehicles and they can’t fix all this electronic s$it and declare your vehicle an “electronic total loss”. I was told this by a top ins adjuster. They make a killing on the parts. Usually make more than the retail price of the car after they pay you squat.

      • Petunia says:

        Do not despair. Some enterprising entrepreneur is bound to start building cars with none of the crap people hate. Imagine a totally off the grid car, bound to happen.

  10. Red says:

    Couldn’t find coat hangers ordered them from Walmart a 10-pack is $2.28 ordered the max 4 packs first they delayed them now they outright canceled them.

    • Cobalt Programmer says:

      There were never a coat hanger and vacuum cleaner situation.never. Doctors did it behind closed doors. Charged extra. Tax free income. Everything was hush hush. The other gender guarded the secrets, what they say thick as thieves. Then it was legal. Ask an old doctor…

    • Anthony A. says:

      I’m all stocked up here in Houston…no problemo.

  11. J-Pow!!! says:

    I told Expedia to jack hotel prices once covid is over the hump again. Hope nobody minds…

    • Wolf Richter says:

      They already jacked those prices up. We just spent six days traveling along the coast in Northern California. Jay, you need to get out a little and actually pay for something every now and then to get a feel for the effects of your policies in real life.

      • Yort says:

        Wolf Alert – didn’t Jay say he was printing trillions to save/create minimum wage jobs to help the poor and homeless…AKA anyone who can’t afford a basic $600,000 “starter home” in 2021??? I’m guessing “$600,000 houses are pretty cheap for Fed members trading SP500 stock futures, utilizing insider Fed meeting pre-data and analysis and making millions on what EXACTLY what landed Martha Stewart in jail for making a little over $100,000 via trading cattle futures utilizing insider information…sigh…

        Simply put, the Fed has a “license to steal”…as if 2% is good, I’m guessing Jay believes 6% is Pho King amazing?!?

        Yet it would seem that Jay has not read the 9/17/21 Bloomberg article debunking his minimum wage employment bonanza via his monetary drivel theory that the cure to self-inflicted economic issues is perpetually printing trillions and ensuring “Stagflation Nation USA” will be our future:

        “Inflation Has Turned $15 an Hour Wages Into a Setback’

        Wages have risen this year, but inflation has made that money worth less than before, preventing any meaningful improvement in living standards.

        • Yort says:

          And Bloomberg gives us a good indicator when the masses will finally figure out that they have been bamboozled via Fed induced inflation…per Bloomberg:

          Eventually, people will realize that prices went up, and that their raises were illusory. At that point they will start getting mad. This is what happened in the 1970s, when a decade of high inflation coincided with — and possibly caused — real wage losses for the average American worker. Surveys later showed that the reason people didn’t like inflation was precisely that they thought their wages couldn’t keep up.

        • Old School says:

          Gold and the big gold miners pulled back this week. Finally was able to get precious metals and miners to 10% of my retirement portfolio in case the beatings continue for the next 10 years.

        • Anthony A. says:

          I recall as a young Plant Manager in manufacturing around 1980 giving my staff 15% annual raises. They were happy until they went shopping.

        • Beard says:

          Hillary Clinton did the cattle futures thing. Martha went to prison for not ratting on a friend who gave her inside info she didn’t act on.

  12. Wisdom Seeker says:

    I’m surprised how many people here Still Don’t Get Inflation.

    This isn’t the Great Recession. Flip your expectations. Back in 2008, yeah, stuff got expensive, but then we had a crash and everything got cheap in 2009-2010. So it paid to wait to buy stuff. But that was a deflationary crisis. Dollars were scarce since the system was riddled with loans-gone bad. Prices dropped because supply was there but few could buy.

    This crisis isn’t going to play out that way.

    Prices are going up now because supplies are crimped. Demand went up from all the printed cash, but supply went down because COVID etc. So prices are up and everyone wants more cash, but they can “afford” less and less.

    Meanwhile, who in the government is doing anything useful to fix the supply-chain bottlenecks, or to increase production?

    Until we stop breaking the system, and wasting money willy-nilly, there will be shortages all over and prices will continue to rise.

    In stagflation, you can wait to buy stuff, but unless you see the system getting fixed, don’t expect the prices to actually come back down to where they were!

    • Apple says:

      “Meanwhile, who in the government is doing anything useful to fix the supply-chain bottlenecks, or to increase production?”

      That only happens in China.

      Here in the US, we allow the invisible hand of the market to correct any imbalances.

      • ivanislav says:

        “Here in the US, we allow the invisible hand of the market to correct any imbalances.”

        Thanks for the laugh, bless your heart.

        • Mark says:

          “Here in the US, we allow the invisible hand of the market to correct any imbalances.”

          Oh man Hahahahahahahhahahahahahahahahahahahhahaha
          Best joke of the month

      • TheWealthEffectIsAPonziScheme says:

        Lol, our “invisible hands” are busy getting their call orders in before announcing their policy decision.

        J-Pow!!! R u gunna buy November Puts on Tesla or November Calls on Nvidia before your next policy announcement? Come on bro, we need some super duper free market capitalism guidance!

      • drifterprof says:

        Apple: “Here in the US, we allow the invisible hand of the market to correct any imbalances.”

        That statement has a grain of truth to it. A WalletHub survey found that 16 percent of Americans think the Federal Reserve is in charge of consumer credit scores, and more than half had no idea when the Fed last raises or lowers interest rates. I don’t want to hurt J-Pow’s feelings, but a survey would probably show that less that 10 percent even know his name.

        So, for the vast majority of Americans, there is a major “invisible hand of the market” (the Fed) at work. It would be more accurate, however, to say that “Here in the US, we allow the invisible hand of the market (Federal Reserve) to *cause* many imbalances.”

        • historicus says:

          The invisible hand is a collection of the unelected who dictate financial conditions…
          Monetary Dictators serving some at the expense of others….unaccountable and unmonitored.
          If only there really was an “invisible hand” of a free market.

      • Random guy 62 says:

        Lol

    • historicus says:

      “I’m surprised how many people here Still Don’t Get Inflation.”

      IT is remarkable indeed. A Fed in existence to “promote stable prices” promotes inflation instead….and when it runs “too hot”, they dont lift a finger.
      Everyone just got a 5% pay cut on current earnings and any that they may have been saved.
      Wake up America!

      • Anon1970 says:

        You forgot the Fed’s second mandate: The Humprey-Hawkins Full Employment Act of 1978.

        • historicus says:

          Humprey Hawkins full employment act?

          Look back as see what was considered FULL employment in the 70s and you will see it was 5% unemployment….

          and what are we at now…WITH RECORD JOB OPENINGS ?

          Low interest rates do nothing for employment in this condition we are in…..

        • historicus says:

          The Fed’s second mandate is “stable prices”

          “”It is the Federal Reserve’s actions, as a central bank, to achieve three goals specified by Congress: maximum employment, stable prices, and moderate long-term interest rates in the United States”” ”
          from the Fed web site…..unless they changed it recently

  13. historicus says:

    So, J Powell
    “When is transitory no longer transitory?”
    asking for a friend.

    • crazytown says:

      On a long enough timeline, even the very existence of the united states of America is transitory.

  14. CJH says:

    Resource availability will determine prices, employment and just about anything else discussed here. You can’t buy that which is not for sale. Right now the supply chains are in distress. Will this link in resources always be in distress? I suspect longer than people now believe. Keynes wrote: “There may be some financial calculation which shows it to be advantageous that my savings should be invested in whatever quarter of the habitable globe shows the greatest marginal efficiency of capital or the highest rate of interest. But experience is accumulating that remoteness between ownership and operation is an evil in the relations among men, likely or certain in the long run to set up strains and enmities which will bring to nought the financial calculation.”

  15. LM says:

    LLBean finally had a 15% cardmember sale this week. They have had almost no sales since the pandemic began. This was probably just to appease cardmembers like me used to the more occasional perk, not out of any real need to drum up business. Supplies run out quickly and order confirmation now takes about a week instead of a day. I still love LLBean—one of the few clothing brands where the products actually last.

    • Rowen says:

      Does LLBean have a generational problem, kinda like Harley Davidson?

      I don’t know anyone under 50 that buys LLB. It’s all Columbia, Patagonia, or TNF.

  16. Bobber says:

    Why would inflation be transitory if the government is proposing a $3.5T stimulus that will surely be $1.5T or more, to be enacted in a few months, and the Federal Reserve is monetizing that deficit by injecting $120B a month of cash into the economy via QE?

    The stimulus will not be funded with tax increases. The money will be printed. They can’t even close a carried interest loophole, supported by bad guys (hedge funds), and supposedly supported by both political parties. This goes to show you, major decisions in this country are made by a “black hole” of wealth.

    • MonkeyBusiness says:

      “This goes to show you, major decisions in this country are made by a “black hole” of wealth.”

      I bet someone will come in and say that it all started last year. ROFL

      Breaking News: major decisions in every country are made by powerful people. Democracy is just a charade.

  17. BuySome says:

    Hot investment tip>>>>PNR Airways*….parts for the £anding gear may be on back order, but they have Trillions of ¥ummy chicken sandwiches to hand out…passengers just need to fork over those pe$ky parachute$ so the load can be lightened. Pilot has ordered the bar be opened while he refuels inflight and maintains a constant circling pattern with an upward inclination towards the €xosphere. Fear not for those aren’t cargoe ships off San Pedro…them’s rescue vessels full of flotation devices. ¥ou just can’t loose on this stock. [*Point of No Return]

  18. Rowen says:

    Luckily summer is almost over because the chip shortage is really starting to hit the HVAC industry. A friend had a customer wait 2 weeks for a replacement unit to be available. Probably a good time for technicians to learn to actually diagnose failures, instead of just scrapping and replacing parts.

  19. roddy6667 says:

    What will Americans do without their Chinese made artificial Christmas trees? Oh, the humanity!

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