Retail sales in the US fell short of expectations this month, according to data compiled by the Commerce Department. Retail spending decreased 0.6% from April to March, undermining forecasts of a 0.4% decrease. Yet, Americans are spending MORE on the essentials such as groceries. How is this a shocking admittance to anyone?
Even online sales fell by 1.2% from March to April. Americans spent 1.6% less at clothing retailers, and 0.9% less at hobby stores on a monthly basis. Again, of no surprise, gasoline sales rose 3.1%.
The Fed is attempting to smooth over the data, using rhetorical language such as the economy is presenting a “softer tone.” Federal Reserve Bank of New York President John Williams, who believes monetary policy is “in a good place” albeit “restrictive.” Williams, like Chair Powell, said that there are no indicators stating a need to lower interest rates. “I don’t expect to get that greater confidence that we need to see on the inflation progress towards a 2% goal in the very near term.”
The Fed held rates loosely for so long that there was not much it could do, in addition to the utter disaster that is America’s fiscal policy. I explained in another post why the Fed simply cannot attain the 2% target.
People do not have the disposable income to spend on retail at this point, and those who do prefer to invest or save those funds as confidence has vanished, leading to a pullback in spending on nonessentials. Bad news for America’s consumer-based economy.
April’s CPI is up 3.4% YoY, slightly down from March’s 3.5% posting. I do not believe they are accurately calculating prices. No one believes them at this point. So, we should expect the Fed to maintain the 5.25% to 5.50% rates at the next FOMC meeting. Inflation is here to stay.
