Retail Sales and Producer Prices

The stock market closed at yet another all-time high yesterday. It’s mostly flat so far today. There hasn’t been much volatility of late.

This morning’s retail sales report said that retail sales dropped 1.3% last month. What’s happening is that as areas of the economy are reopening, consumers are shifting their buying to services. That’s not included in the retail sales report.

This was an unusual retail sales report. For example, online sales actually fell as more folks want to go shopping in person. That’s certainly understandable. Spending at restaurants and bars rose 1.8% last month.

If we compared last month’s numbers with May 2020, then retail sales are up 28%. From the Wall Street Journal:

In the four weeks ending June 2, spending at casinos rose nearly 17% from the four weeks prior, while consumers spent 9% more at theme parks and indoor-entertainment centers including bowling alleys, according to Earnest Research. Spending at gyms was up almost 4% over the same period.

This morning, the Labor Department said that producer prices rose by 0.8% in May. That’s a very big increase. Typically, inflation will show up at the producer level first before it works its way down to consumers. Over the last year, producer prices are up by 6.6%. That’s the largest year-over-year increase since they started collecting the data in 2010.

Even if you exclude food and energy, then the PPI was up 5.3% over the last year. That’s the highest increase in seven years.

The Federal Reserve said that industrial production rose by 0.8% in May.

Posted by on June 15th, 2021 at 10:56 am


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