by Chris Black
The data just reflects the amount of money Americans spent on retail goods. It is as much an inflation indicator as it is a sign of strong buying patterns.
For example, if consumers buy 100 widgets in a month at $1 per widget, and the next month, they only buy 75 widgets, but the price inflates to $2 per widget, retail sales would rise 50%. But consumers only bought 75 widgets. The number of actual units sold fell even while dollar sales went up.
This isn’t a sign of economic strength. It’s just inflation. Consumers are buying less, but they’re paying more.
Second, consumer debt is on the rise. Americans might be spending, but they’re putting it on plastic.
Through the pandemic, Americans, by and large, kept their credit cards in their wallets and paid down balances.
We saw a big drop in credit card debt with each round of stimulus. Some consumers used their stimmy checks to pay off credit cards. And Americans didn’t need to pull out the Visa since the government stuffed big wads of cash in their pockets.
We saw small upticks in credit card balances in February and March of this year as the recovery began, but a sharp drop in April as stimulus checks rolled out again. But Americans started borrowing in earnest again in May.
In September, credit card balances rose by $9.9 billion, an 11.8% year-on-year increase. Americans now owe over $1.01 trillion in credit card debt.
Without stimulus money, Americans are buying stuff the old-fashioned way. They’re charging it.
There are two important factors to consider as you analyze these surging retail sales numbers.t.co/mKBIldkOUF
— SchiffGold (@SchiffGold) November 17, 2021
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