The bounce in retail sales reported by the U.S. government makes for quite a sight. It is the very embodiment of a “V” recovery:
Liquidity moves markets!Follow the money. Find the profits!
Here’s the entire history available. The plunge in spring took us down to levels not seen since April 2000, precisely twenty years earlier, and we bounced back to a level as if Covid-19 pretty much never happened.
I have a couple of remarks about this astonishing recovery.
First, it is largely driven by the thunderstorm of cash that’s poured down on the heads of the unemployed. Millions of people are actually making better money sitting around the house than they were working, and I read that one-fifth of those on unemployment have doubled their income by binge-watching Netflix instead of doing what they normally do.
This is going to end within days, however. July 26 marks the end of the $600/week federal gravy train, and a hodgepodge of multi-trillion dollar Federal giveaways will be terminating in the weeks ahead.
The bored, spendthrift citizens receiving all that free money have dutifully spent it on good whose value has basically gone to $0 once inside the home, and while this massive consumption by be called many things, there is one adjective that absolutely will not apply to this bonanza: sustainable.
The other thing I wanted to mention is that, just for the hell of it, I subjected the above amaze-balls chart to my favorite modification, which is to divide it by the M2 money supply, which I believe paints a more accurate picture, in absolute terms, of “growth’. I’ll just show you the chart and let you draw your own conclusions.
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