May 17, 2022
Retail sales rose 0.9% in April after having risen 1.4% in March and 1.7% in February. In the past year retail sales have climbed by 16.1%. . Despite higher inflation and higher interest rates the consumer appears to be unfazed.
Motor vehicle sales rose 2.2% in April after having declined 1.6% in March. Motor vehicle sales are now considerably higher than they were in February 2020 — just prior to the recession.
But, interestingly, new car sales at a 14.3 million pace remain well below their 16.8 million pre-recession pace. New cars are in short supply because of a shortage of semiconductors so consumers have been turning to the used car market to find the vehicle they need. The motor vehicle component of retail sales, which includes sales of both new and used cars, is rather buoyant which shows that consumers still need to buy a car but they have shifted their purchases to used vehicles because they cannot find a new model.
Retail sales ex autos and gas, which eliminates the two most volatile components, rose 1.0% in April after rising 1.2% in both February and March. In the past year this series has risen 12.5%.
Restaurant sales rose 2.0% in April after climbing 1.9% in March. It took a while, but restaurant sales are now far higher than their pre-recession level. As the expansion process continues in the months ahead and the number of COVID cases remain subdued, these sales should continue to climb.
The problem is that inflation has been rising as quickly as sales and, as a result, real retail sales — sales adjusted for the increase in inflation — have been unchanged in the past year. Our income has been rising and we keep spending, but the amount of goods and services we are able to purchase with our fatter paycheck is actually no bigger than it was a year ago. Having said all that real retail sales have risen in each of the first four months of this year.
With consumers spending freely we expect GDP growth of 2.0% in Q2. We anticipate GDP growth of 2.0% in 2022.
Stephen Slifer
NumberNomics
Charleston, SC
Hi Steve,
How much of the $2T is going to large corporations vs small business?
Hi Brian,
There are tons of different pieces to that program. But it appears to me that the only “big business” that is getting money is the airline industry. Here are some of the highlights:
1. Every taxpayer receives $1,200 check. $500 extra per kid.
2. Unemployed workers get extgra $600/ week for up to 4 months. When couple with state benefits, some will be making more on unemployment than on their day job.
3. Hospitals get $100. Losing money because they are forced to postpone elective surgeries which is wher they make their money. I think they also get a bigger reimbursement from Social Security for treating COVID19 patients.
4. Airlines get $29 billion in grants, $29 billion in loans.
5. Small businesses get tax credit if they keep workers on the payroll.
6. State and local governments get $150 billion. They are losing sales tax and corporate profits + they have expenses involved with the corona virus like police, fire, EMT.
7. Defense Dept. gets $10.5 billion for deploying National Guard to distribute medical supplies, food, etc.
8 Employers get to defer the 6.25% payroll tax which is their portion of funding Social Security.
9. Payments in there for telemedicine, food stamps, farmers.
A little something for everybody.
Steve