Earlier this week, we learned that spending at retail stores, online sites, and restaurants fell 1.1% in December after a similar decline in November. That could spell bad news for this year. When American consumers—whose total spending is almost 70% of GDP— pull back it’s hard to avoid a recession. But it’s not time for gloom and doom. These are encouraging signs on inflation, and the imbalances in the economy due to Covid and the war in Ukraine could be unwinding further.
Thanks for posting this article. Its crucial that while inflation still a bit high at 6.5% is starting to head in the right direction. We also need to tune out those who are still calling for uber aggressive rate hikes as well. Chances for a 25 basis point rate hike are getting stronger the next FOMC meeting.
Such an important point: "Businesses are not perfect forecasters of what people are willing to pay, and they adjust to prices based on sales outcomes." They may not be perfect forecasters, but they're probably better forecasters than consumers -- at least the bigger companies that are an ever-larger share of our economy and can afford to invest in data, models and talent to improve their forecasting abilities. If businesses are marginally better forecasters than consumers, they can anticipate contractions in consumer demand and adjust supply/purchases accordingly, reducing the eventual need for price reductions.
Thanks for posting this article. Its crucial that while inflation still a bit high at 6.5% is starting to head in the right direction. We also need to tune out those who are still calling for uber aggressive rate hikes as well. Chances for a 25 basis point rate hike are getting stronger the next FOMC meeting.
I can’t take Krugman seriously in his latest opine in NYTimes. https://www.nytimes.com/2023/01/24/opinion/us-debt-deficit-economy.html
Such an important point: "Businesses are not perfect forecasters of what people are willing to pay, and they adjust to prices based on sales outcomes." They may not be perfect forecasters, but they're probably better forecasters than consumers -- at least the bigger companies that are an ever-larger share of our economy and can afford to invest in data, models and talent to improve their forecasting abilities. If businesses are marginally better forecasters than consumers, they can anticipate contractions in consumer demand and adjust supply/purchases accordingly, reducing the eventual need for price reductions.