We have already seen 3rd quarter retail numbers crash on Wall Street as companies like Macy’s, Fossil, and Nordstrom’s came in with double digit revenue declines, leading many analysts to forecast a bad holiday retail season leading up to Christmas and the end of the year. But the reality is that the consumer is spending much less on things like apparel and other discretionary items because they are being bogged down with much higher costs in both rents and healthcare.
The Fed loves to discount inflationary numbers that are tied to consumers and the general economy, and instead prop up deflation within the sphere of Wall Street assets and commodities. And if the real rate of inflation was correctly reported for the entire economy, it would not be languishing at the 2% number the Fed is using to justify their monetary policies, but along the lines of 8-10% per month in vital areas such as food, education, healthcare, and housing.
Following September’s strongest Core CPI gain since June 2014, October accelerated that modestly with CPI ex food and energy rising 1.9% YoY. Broad CPI rose 0.2% YoY (slightly better than the 0.1% expected rise) – the highest sicne December. Month-over-month saw new and used vehicle prices drop, Apparel prices drop 0.8% (most since Dec 2014), PCs drop 0.9%, but was notably offset by the bigger-weighting in Medical Care which rose 0.7% MoM (3.0% YoY) and Shelter rose 3.2% YoY. – Zerohedge
This rise in costs for necessary spending by consumers is quickly reaching a tipping point, and goes far beyond the rhetoric of whether retailers will have a good Black Friday selling day. In many places around the country, workers are paying close to 50% of their incomes on rent costs alone, and the rise of Obamacare premiums are causing many to simply go without a policy because it is cheaper to pay the fine.
With wage growth stagnant, and even declining in many sectors, and with the phantom of a new recession occurring in many parts of the economy, having consumers already stretched to their breaking points will be a disaster for everyone but the 1% who can borrow cheap money to keep their businesses going. And with the Fed already beyond the point of no return when it comes to raising interest rates or halting their money printing schemes, price inflation on vital consumer areas will only get worse, and drive millions of Americans out of a lifestyle that is unsustainable, and unlivable.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.