January 12, 2018

“Good mood” today meant “bad mood” in the 1990s

Misleading comments on the retail sales print: “Spending at U.S. retailers rose in December for the fourth consecutive month, capping the strongest year for sales growth since 2014”. “Definitely the consumers are in a good mood. The confidence is up. We’ve seen the labor market has been rather solid. “These are some positives going into 2018.” The chart indicates that retail sales follows on the heels of the encompassing nominal spending (NGDP) growth. While the Fed constrains the growth of NGDP, sales will also be “capped”. In the 1990s, up to the mid-00s, while NGDP growth averaged 5.5%, retail sales… Read More


“Inflation wish”

Given how many are worried about “lowflation”, whenever a new data point is released you are likely to get absurd (and misleading) comments such as in the two examples below. “U.S. consumer prices rose in December, bolstering expectations that long-weak inflation is set to gain strength in the new year.” “For now, this report adds more weight to the idea that the run of soft numbers from March through July was ‘transitory”. To cap it “brilliantly”, this from Justin Lahart at the WSJ: Janet Yellen can take a victory lap about inflation on her way out as Federal Reserve chairwoman.… Read More