Garbage in, garbage out. The phrase is usually associated with computers, but it also applies to the formulas used to generate government economic data. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey goes over the January CPI and retail sales data with that phrase in mind.
Retail sales came in much stronger than expected in January after declining the previous two months. Mainstream financial media pundits immediately declared that this “jump in consumer spending” was a good sign for the economy. The Wall Street Journal called the robust sales report “evidence that US economic growth picked up at the start of the year.”
But there is a dark side to this retail sales report.
When it comes to the economy, inflation, and the Federal Reserve, the mainstream just doesn’t get it.
This headline from Fox Business reveals the level of confusion.
“Retail sales unexpectedly edge higher in August despite soaring inflation” [Emphasis added]
The mainstream has suddenly discovered price movements impact retail sales.
For months, retail sales generally came in higher than expected. And for months the mainstream financial punditry ignored inflation and told us this signaled a strong economy. But in July, retail sales unexpectedly fell flat. Now the mainstream financial punditry claims this signals a strong economy.
Retail sales rose 1% in June after a 0.1% decline in May. Mainstream media breathlessly reported that the jump in retail spending “eases” recession fears.
Does it though?
Retail sales unexpectedly dropped in May, casting doubt on Federal Reserve Chairman Jerome Powell’s “the American consumer is healthy” narrative.
Federal Reserve Chairman Jerome Powell insists the central bank can fight inflation because the economy is strong. President Joe Biden keeps telling us the economy is strong. The talking heads on CNBC insist the underlying economy is strong. In a recent podcast, Peter Schiff talked about the economy. As it turns out, it’s not so strong.
Retail sales have spiked over the last few months. You would think that would be great news for retailers, right?
Not so fast.
There is a lot of spin out there when it comes to economic news. You get spin from the corporate media, You get spin from government officials. And you get spin from central bankers. In this episode of the Friday Gold Wrap, host Mike Maharrey spins the spin, breaking down the media take on the retail sales numbers and Jerome Powell’s spin during a talk this week. Whom should we believe? Listen and decide.
American consumers are in a sour mood, but they haven’t stopped spending money. The problem is they’re spending money they don’t have. And they’re getting less for it.
