The Week in Review: April 22, 2024
Just Do It
That ubiquitous phrase from one of America’s most extensive athletic footwear and apparel makers seems to have been adopted by most American shoppers.
The U.S. Census Bureau reported last week that retail sales jumped 0.7% in March, following a strong 0.9% rise in February.
These numbers add to a bundle of recent economic data that is throwing cold water on the idea that the Federal Reserve will proceed with its first rate cut in June.
Why are retail sales important? Consumer spending accounts for almost 70% of total U.S. economic activity. While retail sales exclude services, they include the goods you and I purchase at stores and online. Automobiles are also included.
The graphic below illustrates the trend in retail sales since 2018. The lockdown and ensuing recession sent sales at most retailers down sharply. As you probably recall, some big box retailers, which were considered essential, did quite well.
Note the sharp jump in sales in early 2021. Recall that $1,400 per-person stimulus checks were sent to households via the American Rescue Plan (ARP). A family of four received up to $5,600 if within the ARP's income limits.
Some saved or paid down debt; others went on a spending spree. The graphic illustrates that spending never returned to or approached pre-stimulus levels.
The stimulus checks did what they were designed to do at the time—stimulate spending.
However, as supply chain constraints were hampering global and U.S. production, strong consumer spending added to bottlenecks and contributed to inflation at the time.
Families haven’t received a stimulus check in quite a while. But businesses are hiring, and families are spending. For now, the economy is expanding.
Market Summary
Two for the Road
In 2021, the top 1% of income earners in America made 26% of the country’s total income and paid 46% of total income taxes. - Charlie Bilello
An estimated $58 million in loose change is left behind on airplanes each year. - Interesting Facts, April 14, 2023
Please do not hesitate to contact me with any questions or concerns. I hope you have a wonderful week!
Bill Stordahl, CFP®
Managing Director
Stordahl Capital Management
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