Nominal retail sales up 0.3% in November, last 2 months revised down. Well below expectations & reflects a reduction in inflation-adjusted sales.

BUT, I always like to step back and focus more on what we know than the new increment. And what we know is retail sales remain high.
That last tweet was nominal retail sales. About two-thirds of that increased spending reflects higher prices but one-third reflects people purchasing more. Real sales are converging back to pre-pandemic trends but very slowly. We're way, way, way past pent up demand.
The retail sales release mostly covers goods but it gives us a glimpse of one particular service: food services & drinking places. Nominal sales back on track in this sector but prices are up so real sales are a still a bit off--and have not really risen since Delta emerged.
My favorite in this release is sporting goods, hobby, musical instruments and book stores. Wow that's a lot.
Of course autos are 15X more important for the economy, spending is up in nominal terms but quantities are down.
All in the bean counters are expecting about 7 percent GDP growth (annual rate) in Q4. Would be very, very strong.

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Jason Furman

Jason Furman Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @jasonfurman

15 Dec
FOMC comes in largely as expected following the much welcome Powell pivot. The dots now set the default of three hikes next year--which is both the likely policy and also reduces the risk of surprising markets. We'll see how Chair Powell sounds in the presser.
I still find it unfathomable that as recently as 2 months ago the median FOMC member forecast core PCE inflation of 3.7% for the year. They already had price data for the first eight months of the year when they made that forecast. Now they're at 4.4%. Image
Also a pretty large increased in the forecast for inflation in 2022, now is 2.7%. I would still take the over on that but with much less confidence than I've taken the over on their 2021 forecasts. Image
Read 9 tweets
15 Dec
Russia has had more excess mortality from COVID than almost any other country in the world--more than double the US deaths and vastly greater than the Chinese deaths.

But you wouldn't know it from looking at Russian economic data: GDP back or even above pre-COVID foreacasts.
This shows the limits of the "control the virus to save the economy" thesis--both as a positive theory that predicts economic growth & as a normative recommendation.

Look at the vast differences in *reported* deaths for China and Russia and their economies look roughly the same.
Russia's excess deaths are also well above their officially reported numbers too and second only to Bulgaria with more than 1 million excess deaths. China likely underreports COVID deaths but would still be a tiny number compared to Russia. economist.com/graphic-detail…
Read 10 tweets
15 Dec
What I would like to see from the FOMC today, what I expect the FOMC to do today and what the FOMC will do next year--one tweet for each.
OUGHT:

1. Raise it's 2022 inflation forecast to 2.8%+.

2. Revise its statement to ditch the dichotomous language about needing to at maximum employment and return to the framework language.

3. Announce ending asset purchases in March

4. Median dots show three hikes in 2022.
(OK, cheating with one extra tweet: would also love to see the median long-run unemployment forecast come down to 3.5% and the long-run FFR come down to something more like 2.0% given that the neutral real rate is probably about zero. But less important than the above.)
Read 5 tweets
14 Dec
I set out my proposal & rationale last month. Default plan (to be revised based on data) would be end asset purchases in March, liftoff in May, raise rates every other meeting so three hikes in 2022, and likely end when you got to 1.75-2% for the FFR. piie.com/sites/default/…
Based on further reflection and the last few weeks of data I could see a strong case for setting the expectation for liftoff in March so four hikes in 2022 (and again, delay/cancel it if wrong).
My recommendation did not put 100% weight on my own forecast for inflation but was instead heavily weighted towards the consensus view because I didn't want you to have to believe me on the inflation outlook to believe me on policy.
Read 5 tweets
13 Dec
When you look at this picture are you comforted about the future trajectory of inflation or scared?

Most people are comforted--they picture goods inflation falling while services inflation stays the same.

But what if the shift from goods to services raises services inflation? Image
Some facts on durable goods vs. services in the CPI:

Overall weight:
Services: 61%
Durables: 12%

Core CPI weight:
Services (less energy): 74%
Durables: 15%

So a 1pp increase in services inflation is enough to offset a 5pp decrease in goods inflation.
The US has increased a huge increase in inflation-adjusted spending on goods. This spending has come down a little but remains high. At the same services spending has been recovering slowly and remains well below trend. See earlier thread for more. ImageImage
Read 10 tweets
10 Dec
A little more on the US-Europe comparison. Key points:

1. Output trajectory *appears* to be the same for both (with some possibility the US is ahead).

2. Inflation is much higher in the US.

3. Fiscal support likely considerably larger in US.

A 🧵.
OUTPUT. The Euro area was well behind the United States but seems to have mostly caught up as vaccinations, caseloads, and social distancing rules came closer.
3 ways to compare economic recoveries: relative to the OECD's pre-pandemic forecast, relative to pre-pandemic trends and relative to pre-pandemic levels. (The last overly favors the United States because we should have had more growth due to more favorable demography.)
Read 21 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!

:(