Free-Money-Blow-Off Spike in Retail Sales Got Refueled by Spiking Prices

A monstrously overstimulated economy that caused global supply chains and transportation systems to buckle.

By Wolf Richter for WOLF STREET.

Total retail sales – powered by inflation, seen in magnificent price increases – rose 0.7% in September from August, to $625 billion (seasonally adjusted), just barely below the mind-boggling free-money-blow-off-spike in March and April. Sales were up 13.9% from a year ago, and by 20% from September 2019:

In this monstrously overstimulated economy, demand for goods has surged, triggering all kinds of shortages that are now rippling through the system, as global supply chains and transportation systems have been buckling for a year. This demand was created by $5 trillion in deficit spending by the Federal government and by $4.5 trillion in money printing by the Fed since March 2020.

The magnificent price increases, as tracked by the Consumer Price Index, have inflated retail sales. These product groups account for 52% to the retail sales here:

  • Food prices: +4.6% year-over-year
  • Restaurant prices: +4.7% year-over-year
  • Gasoline price: +42.1% year-over-year
  • Used vehicle prices: +24.4% year-over-year
  • New vehicle prices: +8.8% year-over-year.

New & used auto dealers and parts stores: Sales ticked up 0.5% in September from August, to $123 billion (seasonally adjusted), after four months in a row of large declines off the free-money-blow-off spike in March and April. This is the largest retail category, in normal times accounting for over 20% of retail sales.

The number of vehicles delivered has collapsed in recent months – new vehicle sales in September plunged by 37% from the free-money peak in March – because dealers have run out of inventory to sell, as automakers are having production shortfalls due to the semiconductor shortage. But there’s plenty of demand still, and so prices have shot sky-high, with many new vehicles being sold at prices substantially over sticker, and used vehicles with ridiculous prices.

These massive price increases have muffled the effects of the plunge in deliveries, to where dollar-sales at new and used vehicle dealers and at parts stores in September were still up 19% from September 2019:

By contrast, the number of new vehicles delivered, in terms of the Seasonally Adjusted Annual Rate (SAAR) of sales, a standard industry measure, had collapsed to 2011 levels:

Magnitude of the retailer categories. Auto dealers and parts stores are by far the largest retail segment (black line). Nonstore retailers – mostly ecommerce – have surged out of nowhere to become the second retail category (red line), followed by grocery & beverage stores (green), restaurants and bars (purple), general merchandise stores (yellow), building material and garden supply stores (gray), and all the rest:

Ecommerce and other “nonstore retailers”: Sales ticked by 0.6% for the month, to a record $89 billion, seasonally adjusted, up 10.5% from a year ago, and up a breath-taking 32% from September 2019. Nonstore retailers include ecommerce sales by online-only retailers and by online operations of brick-and-mortar retailers, as well as sales by mail-order houses, street stalls, vending machines, etc.

Food and Beverage Stores: sales rose 0.7% for the month, to $78 billion, up 7.0% year-over-year and 20% from September 2019, fueled by rising prices and by working from home and by not working at all, which transferred consumption from commercial buildings and the establishments around them to supermarkets:

Restaurants & Bars: Sales ticked up 0.3% for the month to a record $72.4 billion, amid price increases (CPI for food away from home rose 0.5% in September and 4.7% year-over-year), as restaurants struggled with higher labor and materials costs. Compared to September 2019, sales were up 11%:

General merchandise stores: Sales jumped 2.2% for the month to $59 billion, a tad below the free-money-blow-off record in March 2021. They were up 12.1% year-over-year and 23% from September 2019. The brick-and-mortar stores of Walmart and Costco are in this category:

Gas stations: Sales jumped 1.8% for the month, and by 38% year-over-year, as the average price of gasoline soared by 42% year-over-year; to a record $51 billion, up 23% year-over-year, and 38% from September 2019. Sales at gas stations include sodas, junk food, beer, motor oil, etc.:

Building materials, garden supply and equipment stores: Sales were flat for the month, at $39 billion, having gone nowhere for months, and were down 10% from the DIY spike that had peaked in March. But they remained in nosebleed territory, up by 23% from two years ago:

Clothing and accessory stores: Sales rose 1.1% for the month, to $26 billion, up 22% from a year ago, and up 17% from two years ago:

Miscellaneous store retailers, including cannabis stores: Sales jumped 1.8% for the month, by 21% year-over-year, and by 26% from September 2019, to a record $14.4 billion. These specialty stores are focused on one category of product, such as art supplies, beer making supplies, binoculars, and the big driver of this phenomenon, the red-hot cannabis stores:

Department stores: sales rose 0.9% for the month, to $12.6 billion, up 19% from a year ago, and up 13% from two years ago. Even miscellaneous stores, driven by cannabis stores, have surpassed what used to be the iconic way of shopping in America:

Furniture and home furnishing stores: Sales ticked up 0.2% for the month, by 13% year-over-year, and by 24% over two years, to $12 billion:

Sporting goods, hobby, book and music stores: Sales jumped 3.7% for the month, 14% year-over-year, and 38% from two years ago, to $9.3 billion:

Electronics and appliance stores: Sales fell 0.9% for the month to $8.1 billion, and were down 1.6% from two years ago. This category covers only the brick-and-mortar stores of electronics and appliance retailers, such as Best Buy. Much of the sales have long ago wandered off to the internet. And other brick-and-mortar retailers, such as general merchandise stores and home improvement stores, compete with electronics and appliances:

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  100 comments for “Free-Money-Blow-Off Spike in Retail Sales Got Refueled by Spiking Prices

  1. 2banana says:

    Looks like a top is forming for sales.

    Also wondering how many folks have all their Christmas shopping now complete as per the supply issues warnings.

    Will there be a steady drop in sales all the way through the new year?

    • Djreef says:

      I suspect very few have Christmas wrapped up. The brick and mortar stores are going to look like a monkey knife fight this year.

    • Old school says:

      Is there any doubt the Fed and congress filled the hole with 2X or 3X more money than was needed?

      • RightNYer says:

        More like 5x.

      • Bobber says:

        The $5T of additional deficit spending and debt (i.e, over stimulus) will accelerate all the negative economic effects that come with high debt levels.

        If they were smart, they would have gradually rolled out the $5T stimulus over a period of three years or more. That would have kept their idiotic plan in play longer, while keeping inflation in check and asset prices intact.

        But now, the debt noose is so tight they can’t even wiggle. It’s only a matter of time.

        • MCH says:

          It’s not a deficit. It’s called an investment. Or human infrastructure…. but keep it investment, it sounds better. It’s not debt.

          Geez, Bobber, do we have to get the language police to come over to have a chat with you about the approved narratives.

          Bad enough that Wolf doesn’t follow it, if we have to apply it to all of his comments, this site might have to be put under watch.

          Heh heh.

        • Nacho Bigly Libre says:

          Noose? More like the c-ring. It’s done stimulating. Now time for the strangled appendage to fall off.

    • RH says:

      I agree. I could not time it, but many people have purchased a lot of stuff in the expectation that the prices for that stuff would continue to rise. Inflation expectations will drive increasing inflation until demand falls off.

      I cannot believe that those who lost unemployment benefits are going to be able to keep buying. I suspect other Americans are going to grow less satisfied with their excessive spending. Thus, there is bound to be a decline in demand sooner or later, probably after Christmas.

  2. Bobber says:

    If restaurant and bar sales are greatly exceeding pre-pandemic levels, isn’t that a sign that the pandemic is no longer restraining the economy? People are going out and mingling. Vaccinations are a large percentage of the population.

    At this point, the need for stimulus is clearly gone. So why is the Fed still printing money? What is the motive?

    • BP says:

      The motive. They and their friends own a great deal of those over-indebted assets.

      • RH says:

        Amen. Do not forget their banks and financial institutions liabilities, such as depositors funds in banks, which are being inflated away.

    • Anthony A. says:

      Restaurants and bars are full around here….seven days a week. It wasn’t this crazy before the pandemic. (Houston, TX area)

      • Joe Saba says:

        restaurants LOOK busy – but I find they are at best 1/2 full due to NO WORKERS
        and watch early/late hours – they look like ghost towns
        I expect 1/2 or more to close after 1st year
        gonna solve worker shortage one way or another

    • RightNYer says:

      The pandemic hasn’t been restraining the economy since at least March or April. There was no reason for the $1.9 trillion “stimulus.” None.

  3. Harry Houndstooth says:

    As far as appliances go, we have been on a wait list for a new refrigerator for 2 months.

    OK Folks, Harry’s Market Call: BUY SRTY (Triple Short the Russell 2000) for 8.42 today.

  4. Michael Gorback says:

    Any data available for eBay sales? I’ve often wondered if there’s any personal asset liquidation going on, whether to downsize or raise cash. A lot of stuff has been dragged around for years from one house to the next that used to be worth something but now are not being bid on ebay. Grandma’s crystal and china, fur coats, Disney sericels, etc.

    • Wolf Richter says:

      eBay hasn’t reported the quarter through September yet, but sales in the quarter through June were down YOY, and from the prior quarter.

      I suspect that eBay is losing market share to platforms that have sprung up everywhere. You can buy used stuff on Amazon.

      So I’m not sure eBay is still a good measure for your theory.

      To prove your theory, we’d have to come up with a broader second-hand sales measure, with monthly data. That would be cool to have.

      • Michael Gorback says:

        Yes, I’ve noticed that FB marketplace prices are generally lower than eBay. There are new entries like NextDoor where I bought a 6 ft tall real wood, glass-enclosed display case for $200 as opposed to the particle board POS I bought from Ikea for twice as much. And yeah, it was inherited from the seller’s mother. A true work of craftsmanship that went for less than a fancy pile of kindling.

        I just got a stimulus check. Hooray for me but that amount only covers 10% of the cost of the used tractor I just bought (and only 50% of my monthly liquor bill).

        But what I didn’t do is say yay now I can afford 10% of a used tractor, time to piss away the money. I needed the tractor and fortunately found a very motivated seller. $1400 was not the deciding factor. If it’s not the deciding factor for a $13,500 tractor how can it be the deciding factor for a $60,000 car?

        But everybody can’t be swimming in money. Still plenty of homeless. Many still not working, UI spigot turned off, stimmies gone – where is the money coming from? The math doesn’t make sense to me. I see WTF charts of ever-increasing prices, sales, etc but where are the WTF charts showing the average household income blowing through the roof?

        “Average working people need more fresh starts. Big corporations, banks, and Donald Trump need fewer.” -Robert Reich, hypocrite of the century.

        • Wolf Richter says:

          “If it’s not the deciding factor for a $13,500 tractor how can it be the deciding factor for a $60,000 car?”

          Yes and no. You need to split these folks into groups. Those that received the stimmies probably didn’t buy a $60k new truck, but maybe a $25k used car and plowed the stimmie into the down-payment. Or they might have bought some clothes or a rowing machine or a laptop and similar stuff. Those that received $400k in PPP loans might have bought a $120K car, and they’re still blowing the rest. Those that made $10 million because the Fed inflated all asset prices, well, they’re still too out there shopping, trying to find things to buy.

      • MonkeyBusiness says:

        eBay is also now asking sellers for their SSN info. It’s one reason I am no longer on eBay. So I gotta pay tax twice for a single item: sales tax and income tax. No way.

    • Betty says:

      Absolutely!
      We’ve been selling off spare building material we’ve had for decades and have found willing buyers cash in hand.

      Lumber, hardware, pipe, sinks, you name it, there’s a buyer out there on Craigslist who will gladly buy it since the quality of new items is lower, there’s a lack of variety and or there’s no supply.

    • RightNYer says:

      eBay jumped the shark as a place for small sellers to sell things periodically and became just another output for Chinese retailers to sell their crap. The main reason is that eBay became WAY too buyer friendly, and also raised the fees way beyond what’s appropriate.

      • TenGallonHat says:

        eBay went from requiring scummy PayPal to receive payments, to now requiring sellers give eBay their bank account numbers to receive payments (at basically the same fee PP charged). Um, no thanks. No. No way. Never. I remember as a kid using a personal check or cashier’s check as payment on eBay :D

    • Brant Lee says:

      Ebay has priced itself beyond a good platform for sellers. With rocketing shipping costs there is no profit left. But still great to sell cheap knock-off junk and stolen merchandise.

      • RightNYer says:

        Yep. With “buyer protection” meaning any buyer can file a PayPal dispute for no reason (“significantly not as described”) for up to 6 months after sale, and PayPal WILL side with them, every time, no matter what evidence the seller presents, along with their fees (16-18% now) along with the costs to ship, I can’t believe anyone bothers anymore.

  5. historicus says:

    Spilling money will do this.

  6. Jackson Y says:

    With stimulus checks and enhanced UI benefits having ended, where are consumers getting all this money to spend? All from savings?

    • Bobber says:

      Where do they get the money?

      They are getting it from Daddy. Expected wealth transfers from Baby Boom to younger generations are $61 trillion. It’s already started.

      Who’s your Daddy?

    • Depth Charge says:

      Cash out refis, PPP loans, savings from enhanced UE, LOANS, etc. There is so much money sloshing around it’s sickening. The FED and .gov GROTESQUELY overheated the economy. What we need is another depression to get rid of this disgustingly putrid excess.

    • Wolf Richter says:

      Trillions of dollars are still floating around out there. That money didn’t evaporate. Consumers, city governments, state governments, companies… they’re all flush with this money.

      • Michael Gorback says:

        Which consumers? The ones with no job, no UI, no stimulus checks? The ones living in tents and under bridges?

        Can you show us where all the money is sloshing around from PPP checks and how it’s working its way into cars, appliances, rowing machines and laptops?

        I would like to see the money flows if possible. In my atrophied old brain I don’t see how huge PPP loans translate into these relatively small purchases in such huge numbers.

        I can’t put my finger on it but somehow this doesn’t add up. My BS indicators are blinking red.

        “People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.” J.K. Galbraith

      • RickV says:

        Most QE money has ended up in bank reserves on deposit with the Fed not so far in money sloshing around the economy. This QE will only fully manifest in the economy when it is loaned out to businesses, consumers, muni governments by the banks. But bank lending is constrained by capital limitations as a percent of loans. It’s the modern way for the Fed to control the economy and its worked, so far.

        • Michael Gorback says:

          Agree. I’ve been saying this for a long time. It doesn’t matter how much you print if it just gets stored in the basement. The only significant effect is lowering interest rates.

          Directly inject money into the hands of the people via the Treasury and boom!

      • Ron says:

        China has most of the money more ships everyday

  7. Winston says:

    Gleaned from multiple sources about the jammed up CA ports:

    As a preliminary matter, truckers are aging out of the job, and new ones aren’t coming along. Because federal law requires that truckers be at least 21, kids who leave school at 17 or 18 get involved in other careers, leaving trucker shortfalls. Women don’t offset this problem because, as is typical for most physically difficult jobs, it’s not their thing. Those are long-term problems. Even in my area, it was a stated shortage of hazmat qualified tanker truck drivers who require additional training which contributed to empty gasoline pumps.

    Carriers domiciled in California with trucks older than 2011 models, or using engines manufactured before 2010, needed to meet the Board’s new Truck and Bus Regulation beginning in 2020. Otherwise, their vehicles would be blocked from registration with the state’s DMV, according to California law. The incentive is to purchase electric trucks which do not exist.

    The EPA reached an agreement with the California Air Resource Board to shut down semi-tractor rigs that were non-compliant with new California emission standards. In effect, what this 2020 determination and settlement created was an inability of half the nation’s truckers from picking up anything from the Port of LA or Port of Long Beach. Virtually all private owner operator trucks and half of the fleet trucks that are used for moving containers across the nation were shut out.

    In an effort to offset the problem, transportation companies started using compliant trucks (low emission) to take the products to the California state line, where they could be transferred to non-compliant trucks who cannot enter California. However, the scale of the problem creates an immediate bottleneck that builds over time. It doesn’t matter if the ports start working 24/7, they are only going to end up with even more containers waiting on a limited amount of available trucks.

    Problem #2 is California’s infamous AB-5, the law that, as a sop to the Democrats’ beloved unions, killed the gig economy. Traditionally the ports have been served by Owner Operators who are non-union. But under AB-5 California has now banned Owner Operators. Just like the union longshoremen, union truckers work under a whole host of work rules that simply can’t accommodate crisis conditions like the ones in Los Angeles.

    • tom15 says:

      Going forward I would assume this will only worsen as CA puts more restrictions on trucks.

      Short term will Florida, longer routes, be of any assistance?

    • Trailer Trash says:

      I drove big trucks for a few years in the late 1980s. It sucked. Not only was I away from home all week but the pay was poor and working conditions were worse.

      All the time the dispatcher was telling me to drive faster, longer while the DOT is always looking to bust drivers for nitpicking stuff, like a missing cap from a tire valve, as well as overweight or over hours.

      I hauled a lot of potatoes bulk to the Frito-Lay plant in Connecticut. Every load was overweight, which I had no control over. Hauling lumber meant I had to tarp the load, then untarp the load, a huge pain in the ass while 13 feet in the air with zero fall protection.

      I liked hauling empty beer bottles. It was no-touch freight and light weight, so not much slowing down on the hills.

      There’s plenty of drivers. There’s a lack of quality jobs that pay well for important work. But Wall Street parasites still think that “essential workers” means “disposable workers”. Will that ever change? I doubt it.

      • RightNYer says:

        If anything good comes out of the pandemic, it would be the real producers going Galt and leaving the BigTech and Wall street parasites to starve and freeze.

        • makruger says:

          I’m not sure running out of feeder stock counts as going Galt. According to recent news reports, it would seem the workers are the one’s who have actually gone Galt here.

        • RightNYer says:

          Makruger, that’s what I’m referring to. By “producers,” I mean truck drivers, short order cooks, warehouse workers, people who actually produce

      • Big Spender says:

        Around my small town, the Italian restaurant has more tables now (inside plus tables outside around the entire building, courtyard, garden) and is completely filled. So busy the staff can barely walk around. I am surprised there isn’t a shortage of propane for all those outdoor warmers.

        Yah, let’s keep stimulating…

        • Michael Gorback says:

          Those extra customers might just be people whose favorite place went out of business.

    • Ron says:

      Biggest problem is long hours no life 14 hour days over regulated scales obsolete besides dumb asses on phones all day surprised more aren’t dead I drive a truck

    • MCH says:

      This is all just noise. There is a very obvious solution if you just think about it. CA is the home of self driving, and there is a company that is out on the market that can readily solve this problem if it only had the right amount of investment. In fact several companies, but I’ll just pick the one that has been talked about a lot earlier in the year.

      This company is working on fuel cells and electric semis, heck, there was even a promotional video all about it. Then slap on some self driving gear, there are at least half a dozen LiDAR companies and self driving software companies that have come onto the market over the last few years. All that’s really needed is some investment dollars from uncle Sam and in no time, the problem you’re referring to will get resolved.

      As for the company, it’s a perfect infrastructure type investment, green, US based, you can even say public private partnership, Nikola Motors checks all the boxes. A few billion from the US government, and it’ll create real jobs of the future. An ideal investment for the Federal government if I ever saw one.

      • Old school says:

        Usually slam dunk investments don’t have to wait around for a government infusion. Sounds like a new sports arena. It’s so good of an investment the city needs to kick in $250 million.

  8. SocalJim says:

    “A monstrously overstimulated economy that caused global supply chains and transportation systems to buckle.”

    If it was only this simple the world’s central banks would cut.

    • Gattopardo says:

      Overstimulation caused it as Wolf notes. The problem now is that cuts alone would not fix it. So yes, they would cut, except that now also comes with other consequences they don’t like (aka payback of some form). And this is the whole deal now, the Fed trying to weasel out of this mess with minimal collateral damage, thus the long long taper….

  9. This feels like the pause before SHTF. People in MI need lead filters for their tap water. Hey its all retail spending.

  10. MonkeyBusiness says:

    I am surprised retail sales is still up there. With the rent moratorium expiring and some people no longer receiving stimulus checks, I suspect many people probably have gone back to their old standby i.e. credit cards.

    • COWG says:

      MB,

      Time will tell…

      Looked like data was thru Sept…

      Buying all this stuff is one thing, keeping it is another…

    • Truckman says:

      I have been spending lots. My barn has over 1,000 sq ft of stuff in it for my next 2 years of renos. I got it all at pre-Covid prices, some of it has taken more than 7 months to arrive, and I spent the money in my savings account that was getting practically zero interest. I am not the only person around here that has been doing this. My auto mechanic friend bought a whole load of spares to have as stock round about the peak in Wolf’s Parts graph.
      The thing is, I now have everything I need, so my spending over the next couple of years will be very small. Almost everything I bought is now either 3x the price, out of stock, or both. It will be interesting what happens to sales in the next 12 months, as they may drop rapidly.

  11. enough says:

    Since inflation is the only way this much new money settles in, I bet the Feds only regret was not raising the target to 5% instead of 2.

  12. Masked Ghost says:

    Someone on the boob tube the other night (not sure who) was interviewing dock workers in California.

    Something like 65 ships waiting off shore to be unloaded. Dock workers said some containers were unloaded months ago, but are still sitting around waiting to be moved inland.

    The problem is more complicated than just having dock workers do double shifts seven days a week. Once the containers are off the ships, someone still has to move the containers to another location.

    • MCH says:

      meh, this long line of ships off of LA is not exactly new news. It’s been happening for the last few months. You periodically hear about the stack up. It hasn’t gotten any better.

      But thank goodness, there is a 24/7 plan that was just released a couple days ago so that this mess in the ports of LA can get cleaned up. We’ll probably have this resolved sometime in the next few weeks.

  13. Petunia says:

    We spent a ton of money, for us, in the last couple of months. We finally bought a mattress for which we had saved up. Then one of our phones broke, then the car needed repairs, and one of us got sick too. We can’t believe how much we spent, but none of it was frivolous spending. It was all for stuff we needed.

    Stuff happens, especially when you keep putting things off because you can’t really afford it this month. Then life makes you spend it anyway. So I am partly responsible for the data on Wolf’s charts, no stimmies, no ppp loan, and definitely no pay raise.

    • TenGallonHat says:

      At least you’ll be able to sleep well!
      My mattress is 16 years old and I’ve hated it since Night 1…
      I thought it was bad enough my used car clunks non-stop in the front…..now it zigs and zags in the back, and bounces after it’s parked…
      No free money for me, here I sit.

  14. Gary Yary says:

    A few years back the mantra was to raise the minimum wage to $15 per hour. California and Oregon fell into that system and began raising the pay at $1 per year up to $15.

    A parking lot attendant in rural Oregon gets $17 per hour today.

    The increases or discrete inflating away the mega never ending debt shine everywhere! If you can’t beat em – join em.

    Here is the next poll. When do people start pleading to raise the minimum wage to $20 per hour?

    My first job paid $3.35 per hour. I am really glad I blew that money on wine, women and song.

    Wolf’s charts are insane. What if they fall below the trend line? The jacked up ports are excess inventory liquidity. Do prices revert and things get upside down? Or does the fantasy economy keep churning? If nobody buys the glut of container goods what happens?

    I am old and bored…some economic mayhem would be interesting…

    The eviction and forbearance transition will be worth a glance.

    How those charts trend will be more fun than a roller coaster. Michael Engle and his Viking horn quote still makes me laugh! A corkscrew chart!

    Best wishes,

    • Ron says:

      My first job 1$ a hour

    • Depth Charge says:

      I remember the $3.35 per hour minimum wage days. You must be a Gen Xer, too. I used to earn that +tips in my teens.

    • RightNYer says:

      There was never any logic to the $15. It was purely an arbitrary number, just like the gun banners declaration that a magazine that holds more than 10 rounds is “high capacity.”

      • Wolf Richter says:

        RightNYer,

        There’s lot a logic for $15 min wage in CA, not so much in OK. It just depends where you live. A national min wage has bizarre effects, given the huge disparities in costs of living.

        • Nacho Bigly Libre says:

          Excerpts from 2021 CBO report:

          . Employment would be reduced by 1.4 million workers, or 0.9 percent

          . The number of people in poverty would be reduced by 0.9 million.

          . The cumulative budget deficit over the 2021–2031 period would increase by $54 billion.

          Since you don’t like links, and it’s easy enough to search for the report, I just copied the text.

        • RightNYer says:

          Right, but that’s my point. While there were places where $8 wasn’t enough, $15 wasn’t necessarily enough either. It could have just as easily been $14 or $16, and now that the market on its own has raised rates beyond $15, inflation has taken it such that $20 or $25 will need to be the new rallying cry.

        • Chuck C says:

          “There is a lot of logic for $15 min wage in CA”. What if the employees getting paid $15/hr only produce $8/hr of productive work? How does an employer survive this?

  15. Brent says:

    Please…

    Is not it amazing ?

    Let’s just marvel at Washington’s endless capacity to keep his Ponzi alive every time it begins to unravel, as was the case in the fall of 2008 and the spring of 2020.

    • Depth Charge says:

      Now they’re going to go after the little guys’ checking account to pay for all of their fraud. Any account with more than $600 in it is fair game. What do you bet we start hearing stories from people online crying “the IRS stole all my money!!!!” ? Hell yeah they did.

      There is nothing too low for these filthy scvm. But hey, Weimar Boy Powell and his buddies were front running the markets – day trading on their own inside info to amass sickening wealth – and that’s just fine with this administration. As long as you bombed a carload of kids and reinstated Andrew McCabe’s retirement, s’all good.

      • Brent says:

        Bob Woodward (of Watergate fame) wrote a book about Alan Greenspan titled “Maestro: Greenspan’s Fed and the American Boom”

        Jerome Powell deserves the book “Virtuoso:Don’t try to win Market’s Hearts & Minds.Grab it by the Balls,Hearts & Minds will follow”

        It can’t be emphasized enough:what Fed does is simply amazing.Like guy on PCP (aka Angel Dust),riddled with bullets, keeps coming and swinging at cops.

        But, unlike guy on PCP who eventually drops dead, Fed’s Ponzi will never end.Not in our lifetimes.

  16. Cobalt Programmer says:

    My usual weekend post

    1. Why the container ship jam and backlogs happened in the first place?
    2. If there is more goods being shipped, it means more activity in the economy and retail sales
    3. What is the majority of the goods being shipped? are they essential (medicine, toilet paper) or just electronics for children? Can the authorities track the essentials and prioritize them?
    4. Apart from Christmas goods does this have anything to do with #emptyshelves trending on twitter now?
    5. [Censored]
    6. Lets say trucks are the main problem, If this is so important, can we activate national guard to drive the trucks or even military?
    7. Is it possible to pay the truck drivers an attractive pay and ask them to drive trucks
    8. Can we assume the economy is booming?

  17. BuySome says:

    When you’re living in a comic book economy, it’s helpful to present these charts like a graph-ick novel for the crayon crowd to understand. Therefore, with Battyman and Robin’ You in charge of generating the red ink applications, each one of those peaks should be highlighted with words like Blam, Pow, and ??whatever. The final frame we’re working toward will hold the reserved word “Ka-Boom!”.
    Perhaps we can also consult a physicist to match this against recorded measurements of the runaway activity in a nuclear reactor where all the safety protocols have been ignored to find if there’s any comparative reality involved. I’d almost swear all those increases of vehicles whipping in and out of parking lots are beginning to resemble uncontrolled particles on their way towards an extreme velocity. Shoppers’ heat seems to be building towards a massive blow-off, and it may be too late for extracting the rods to have any cooling effect.

    • Truckman says:

      As a physicist, and somebody who’s lectured on engineering systems…
      1. Point of order: Inserting the control rods cools reactors, not extracting them. But I know what you mean..
      2. The key point you are making about possible controls depends on three things:
      (a) whether the system is stable, neutrally stable, or unstable.
      (b) whether the available control mechanisms are sufficient to return an excursion back to stability
      (c) whether the people responsible will recognize the excursion soon enough, or at all, to act.

      Personally, I assess the answers as:
      2(a) Unstable, it was neutrally stable till 2012.
      2(b) No
      2(c) No, and No.
      This isn’t fixable with the current system of government in the West. The personalities don’t matter, as the party system results in an increasingly corrupt idiocracy. Get rid of the current idiots and they’ll just find more. Forget the economics, all of it. Ask yourself how someone capable of fixing the problem gets to be the President, Prime Minister, Chancellor, etc, of the most popular party. Ain’t gonna happen.
      Plan accordingly.
      The only question is the timing of the collapse.

      • BuySome says:

        🤔Here on Tralfamadore, we extract the rods. 😱Always have. Always do. Always will. So it goes.💀 Hello Goodbye. Goodbye Hello.😹😹 Gotta go push a button now.

  18. TXTightwad says:

    One reason sales are up is the wife and I are stocking up like crazy. Got a free 20 cu ft freezer on Nextdoor. So what if it doesn’t auto defrost anymore. But we bought 3x to 5x normal stock of all paper products, all proteins, wine. I lived through the 1970’s and it was ugly, and people and governments had a whole lot less debt then.

    • Depth Charge says:

      Just make sure you defrost that freezer from time to time. Otherwise the thing will swell up and deform, ruining the door gasket and the entire unit.

      • RedRaider says:

        You got that right. Happened to me a couple of years back. My brother has just given me a pile of fish. Phew. Did that stink.

  19. Depth Charge says:

    Seems like we’ve reached a permanently high WTF plateau.

  20. Old School says:

    I think in 20 years we are going to look back and say the government’s reaction to the crisis was worse than the crisis itself. I read that age adjusted death rate is at 2004 levels. Life seemed to go on in 2004 without all the government interventions.

    I think the problem is that politicians see crisis as an opportunity because people are afraid and expect government to do something. Maybe government should do a little, but seems they always do too much.

    • We have needed inflation for many years, and finally, we have it.
      Historically, inflation has been an easy thing to kill. Do we really want to do that just now? No.
      But inflation is a hard thing to manage since it has to be just right, and the results of inputs lag by many months.
      I have to agree with many on the Fed: maintain the lower bound for another year. Get it established before we try to adjust it.

      • In an effort to be brief I was too brief. Sorry.
        What the government reacted to was the potential deflation. Was it too much stimulus? We really don’t know but I think that this much can be said, we badly understimulated in 2008 and it cost us 12 years of slow growth.
        I think this response was more appropriate.

        • RightNYer says:

          No, we had slow growth for 12 years because we don’t have an economy that makes anything, coupled with mass unskilled immigration, rising health care costs, and all sorts of other negatives.

          The idea that we had slow growth because of too little stimulus in 2008 is a ridiculous joke.

      • Wolf Richter says:

        Michael Schofield,

        “But inflation is a hard thing to manage since it has to be just right,..”

        Just-right inflation = 0%, with short periods of modest inflation followed by short periods of modest deflation so that over time, inflation = 0%. That works just fine. Been done.

        This meme that an economy needs inflation is nonsense. There is zero evidence that 2% inflation is good for the US economy. It’s good for some debtors that can raise their prices. It’s bad for the people and businesses that have to pay for it. Inflation creates winners and losers. The best and fairest and most balanced strategy = 0% inflation.

        • Depth Charge says:

          I wish I could give Wolf a bear hug for this post. It’s the truth that we never see printed.

        • Thanks for the reply, Wolf. This appears to be the first time I’ve completely disagreed…I think.
          I don’t believe that this 0% scenario has ever played out in modern times in the US.
          I would have to say that the economy gets very weak and wobbly whenever inflation gets that slow, and the creation of new money, whether the volume of that creation is justified or not, practically guarantees some inflation. Unless the creation of new assets exactly matches the creation of new money. It just sounds like a lot to ask from our “leaders”, beyond their skill set.
          I have to admit, even from a theoretical standpoint it seems shakey.
          Is there an economic school of thought that this comes from? I’d like to study it a bit.

        • Wolf Richter says:

          Michael Schofield,

          The first thing you need to do is disconnect inflation from growth. Inflation is not growth and doesn’t cause growth. Inflation is the loss of purchasing power of the currency. That’s it.

          So what does that mean? It means that sellers that can raise their prices have less burden paying off their debts; and it means that consumers are losing purchasing power in their earnings, which is bad for consumers and bad for consumption. So now wages need to rise with inflation. And now input costs rise….

          The whole theory that inflation causes growth is BS. Inflation just makes it easier for the winners of inflation to pay off their debts, and show sales and earnings increases even if they haven’t sold a single extra thing. But inflation makes it harder for the losers of inflation to live.

          The Fed is never on the side of people who have to work for a living, or middle-class and poor retirees. Those are the losers of inflation, and the Fed routinely sacrifices them at the altar of the asset holders and debtors.

          Trying to willfully generate inflation to willfully benefit some people and sacrifice the others is truly evil. But that’s the Fed we have.

  21. GSH says:

    There is another source of money driving this overstimulated economy most posters are missing. Intergenerational transfers = inheritances.

    About 750K incremental deaths, primarily older folks have passed the last 18 months. Lets assume the median estate is about $500k. This implies about $375B have accrued to the younger generation who are now spending it.

    • True but we have lost the financial leverage that 750k people provide. Short term gain, long term loss? =what? I’m not smart enough to know how all of the hair splitting will work out!

    • Swamp Creature says:

      Yep, Unfortunately, I think there are some groups and people that won’t say it out load, but they are not overly concerned about the loss of 700,000 Americans to the pandemic. They don’t know anyone close to them who died and the ones that died are just like Stalin once said “statistics”.

      • BuySome says:

        A tad bit harsh, as you’ve just committed the same act of placing people into representative groups. The real human that was Uncle Joe is also now reduced to a part of those statistics. People like him become symbolic myths for historical afficianados to autopsy over and over trying to make some sense that probably isn’t there. Each person has to handle life and death at their own level, but the numbers in the big picture are too dificult to deal with in that way. Whole statistics can be positive as they eliminate those subjective arguments that lead to little more than a pissing contest. Imagine if we put Betty Sue out there as a real casualty and suddenly some people are saying her grandfather was a klansman so we should not count her as a loss. What a mess. Statistics become the great leveler which avoids that nonsense, and we’re all going to be part of those counts anyways in the long run…assuming there’s any of us high falutin’ monkeys still capable of it down the line. Once the honor roll scrolls across the TV screen, all the names fall back into a bucket of digital beans. Here lies another soldier…Johnny we hardly knew ye.

  22. Michael Gorback says:

    It is utterly naive to point to one or two or even 10 reasons for this situation. The economy at any level is a series of interconnected systems. As you streamline the systems you reduce redundancy, which is fine right up until you need redundancy. One connection node goes down and it ramifies through the entire system because there’s no work-around, no backup.

    The systems are related to a level of nonlinear complexity that makes weather forecasting look like tic-tac-toe. A small perturbation in one segment can manifest as a disaster far away in another industry or economy. This is Chaos Theory 101.

    We are now witnessing the inevitable destruction of a system that relies on all of the trains always running on time. There is no painless exit.

    • RedRaider says:

      Oh shut up Mr. smarty pants! We don’t need to hear the truth!

      :-)

    • Truckman says:

      Your point about efficiency vs redundancy is well made.
      But take your point to its limit. What shall we do when the current brittle system breaks down.
      Some of us have been to war. The day the Gulf War started we threw the peacetime system out the window.
      But, firstly that system was intended to be thrown out, and there was a much more flexible system ready for use, and secondly everyone was trained in both systems.
      Today, there is no crisis system, reason being it’s entirely racist, genderist, every -ist you can thing of, and more importantly affects profits. Secondly, all the flexible people have left the current system. Where the world is now is exactly where me and my mates thought it would be back in January 2020; the cure is worse than the disease.

  23. Swamp Creature says:

    A new term has popped up in some of the main stream media outlets. Its called “Bidenflation”. I wonder if this sticks. Like the Carter “malaise” and the Carter “misery index”. It may be unfair to put all the blame on one person as the roots of this inflation got back decades, but nevertheless my bet is that it does have traction.

  24. Swamp Creature says:

    The Carter misery index if applied today

    Inflation 20%

    Unemployment 20%

    20 + 20 = 40

    We’ve blown Carter’s peak misery index of 20 out of the water already. Its double already heading for a triple.

    I was lucky to be able to buy my first home on my own (no help from anyone) during the peak of Carter’s misery index period. Sorry to say, this will be a rare event today for the new potential homebuyers.

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