ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES, DECEMBER 2021
Advance estimates of U.S. retail and food services sales for December 2021, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $626.8 billion, a decrease of 1.9 percent (±0.5 percent) from the previous month, but 16.9 percent (±0.9 percent) above December 2020. Total sales for the 12 months of 2021 were up 19.3 percent (±0.5 percent) from 2020.
Total sales for the October 2021 through December 2021 period were up 17.1 percent (±0.7 percent) from the same period a year ago. The October 2021 to November 2021 percent change was revised from up 0.3 percent (±0.5 percent)* to up 0.2 percent (±0.3 percent).
Retail trade sales were down 2.1 percent (±0.4 percent) from November 2021, but up 14.4 percent (±0.7 percent) above last year. Gasoline stations were up 41.0 percent (±1.6 percent) from December 2020, while food services and drinking places were up 41.3 percent (±4.0 percent) from last year.
UK wage growth close to record high
The combination of strong demand for staff and deteriorating staff availability led to a further steep rise in wages as firms competed to attract staff.
Average starting salaries and average pay for temp/contract staff rose steeply again in December. For permanent salaries, only in October and November 2021 had the recruitment industry survey ever recorded a stronger rate of wage inflation than that seen in December.
Such a lack of available staff is not surprising. The latest available official data show that the number of unfilled vacancies had risen to 1.2 million in the three months to October, while unemployment was down to 1.4 million; an implied record low ratio of job seekers to vacancies, pointing to a tight labour market which is conducive of course to high wage growth.
Pretty similar to the U.S. as I showed a few days ago. But Mr. Powell Tuesday argued that there is no evidence that rising wages have transpired into rising prices so far. This nice man is quickly losing all credibility. I don’t know what he reads but he sure is not reading me, nor any of the monthly PMI reports which offer the best, real world, almost real time, data-backed narrative of what biz people right on the front line are seeing.
Here’s the latest Markit report from the UK (don’t think the USA is so different):
The impact of staff wages on prices is already clearly evident in the PMI survey responses. Record numbers of companies cited higher staff costs as a contributor to higher prices throughout the fourth quarter of 2021.
Powell will eventually backtrack from the above statement, like he did “transitory inflation”.
David Rosenberg also backtracked yesterday from his noflationist view:
(…) the three-month trend in the core CPI, at a 7.0% annual rate, is pointing to an intensification of the price pressures. I would have preferred this not to be the case, and it is problematic for the real economy and the Fed is in a real box. (…) Fed tightening into inflation like this, regardless of when it comes down or the causes (which are mostly pandemic-related), has led to an outright economic recession 100% of the time in the past.
Count one more on “Recession Watch”.
But can the U.S. actually trip in recession given
- the liquidity in the system, particularly the humongous $2.5T in “excess cash” sitting in Americans’ checking accounts accumulated during the pandemic?
- and the consumers’ strong balance sheet and low leverage. Debt servicing is now 9.2% of now normalized DPI. Interest rates would need to rise hugely before debt servicing reaches previous choke points of 12-13%.
The problem with the $2.5T in “excess cash” is illustrated by this next chart: 54% of the increase in deposits since Q1’20 rests in the accounts of the wealthiest 10% of households (red and pink bars). Another 42% went to the next 40% group (blue), averaging $25k per household. The bottom 50% (black) got only 4% of the increased deposits, an average of $2,000 per household, now largely eroded by inflation.
The recession buffer is thus with the 51.5 million households (40% of the total) who would need to offset the financial stress of the 64.4 million households with little if any financial cushion.
The additional wealth created by rising equity and home values also aggregated in the wealthiest 10% as Ed Yardeni illustrates:
That’s far from the median U.S. household income in 2020 of $67,521, according to the U.S. Census Bureau. (…) In 2021’s final quarter, 34% of respondents said they felt financially healthy, compared with 48% in early 2021. (…)
Of those surveyed, 30% agreed that “expenses are constantly piling on,” a jump from 23% who agreed with that in 2021’s first quarter.
Nearly half of those surveyed said that their debt is “unmanageable,” and 37% said a surprise $100 expense would make them anxious. (…)
Governor Christopher Waller said in a Bloomberg Television interview that while three hikes in 2022 is a good baseline, the case could be made for four or even five if inflation remains too high.
German Slowdown Sends Global Warning Signs on Supply Chains, China A bellwether of global growth, the German economy slowed sharply at the end of 2021
(…) Germany’s economy probably shrank by between 0.5% and 1% quarter-on-quarter in the September to December quarter, the federal statistics agency said at a news conference on Friday. Germany is the first major economy to give a preliminary estimate of its 2021 gross domestic product.
For 2021 as a whole, German GDP grew by about 2.7% year-over-year, leaving it 2% below its 2019 level. That compares with estimated growth of 5% for the wider eurozone and 5.8% for the U.S. last year, the agency said. (…)
Germany is suffering from its reliance on exports, which support roughly 30% of German jobs, about four times the share in the U.S. German manufacturers are struggling to find parts and labor to produce cars and machinery. They face surging energy prices that are further pushing up sky-high electricity bills.
They are also being squeezed by a slowdown in China, Germany’s largest trading partner in 2020 and a major purchaser of German machine tools and cars. German exports to China declined by 4.2% in November year-over-year, to €8.9 billion, equivalent to $10.2 billion, while exports to the U.S. surged about 15% to €11 billion, according to the federal statistics agency. (…)
The number of furloughed workers in Germany increased to 879,000 in December, or 2.6% of the workforce, up from 712,000 the previous month, according to Ifo.
“The rise in coronavirus cases increased short-time work in hospitality and retail in particular,” said Ifo researcher Sebastian Link.
In the manufacturing sector, the number rose from 381,000 to 390,000 people, or 5.6% of all workers. “This is due to an increase in supply bottlenecks,” Mr. Link said.
Cathie Wood Outflows Grow as Diehard Fans Face Biggest Test Investors pulled $352 million from Wood’s flagship ARK Innovation ETF (ticker ARKK) on Wednesday, according to data compiled by Bloomberg. That was the biggest outflow since March.
(…) ARKK’s outflow was its third-biggest on record; the last time the fund lost over $300 million it was trading 44% higher. (…)
ARKK is now down about 50% from its all-time high in February last year. Yet many of its investors — who poured billions in after the ETF returned more than 150% in 2020 — have stayed loyal even as they lost money.
Fund assets have declined by about $15 billion since the peak, but only approximately $1.1 billion of that was from net outflows — the rest of the drop has been caused by performance. The ETF is now trading well below an estimate of its average purchase price since-inception. (…)
