Holiday Sales Report, The Market & Tariffs
Holiday Sales Report, The Market & Tariffs
- Holiday sales data shows flat growth, but could reflect consumer shifting spending, not overall slowdown.
- Market rises due to lower treasury yields and strong earnings, suggesting consumer resilience.
- Actual inflation rate is below 1%, lower than the 3.6% expectation, indicating inflation may not be as high as perceived.
Holiday Sales Report, The Market & Tariffs
On Tony Katz Today: The economy is a complex and ever-changing beast, and it’s easy to get caught up in the noise. But what’s really happening beneath the surface? In this episode of our podcast, we’re joined by Dr Matt Will, an economist at the University of Indianapolis, to break down the latest numbers and offer some much-needed clarity.
One of the most striking statistics from recent reports is the holiday sales data, which showed a disappointing flat sales number in December. But, as Dr Will points out, “not everything means what a headline means.” He explains that while people may have spent more on luxury goods, they didn’t necessarily spend more overall, which could indicate a slowdown in consumer spending.
This data contradicts some of the more positive GDP numbers we’ve seen lately, and it’s a red flag for the economy. “When you break down the GDP, so, yeah, it’s flat,” Doctor Will says. “We were at $737 billion dollars of sales retail sales in November, and we were at $735 billion dollars of retail sales in December.” The core data, which removes energy and housing, shows a negative 0.1% growth, indicating a slowing economy.
But, as Dr Will notes, “one month of December is not necessarily indicative of the entirety of an economy.” There could be a variety of reasons why holiday sales were down, such as people waiting to spend their money on other things or thinking that things will turn around in six months. And, as he points out, “people should not overreact” to this one report.
Despite the mixed signals, the market didn’t seem to overreact, with the Dow continuing to rise. Dr Will attributes this to two main factors: treasury yields and earnings. “Treasury yields are down, Everybody believes (Kevin Warsh)… okay, this guy’s gonna get confirmed. Treasury rates are gonna get cut, so this is this is good.” Additionally, earnings reports from companies like Taiwan’s Semiconductor, Gucci, and Coca-Cola showed strong growth, with Coca-Cola’s profits up 23% for the year.
This is a significant development, as Coca-Cola is a bellwether indicator of the economy. “Coca-Cola is one of those regular stable 5-6% per year growth,” Doctor Will explains. “They had the ability to significantly increase their price, they didn’t increase their sales. It was a normal increase in sales, but they were able to have pricing power not just because of inflation, but because the consumer was willing to pay it.” This suggests that the consumer is still spending, which contradicts the retail sales data.
As we discussed the economy, we also touched on the topic of inflation. Dr Will noted that the current expectation is for a 3.6% inflation rate for the year, which would be a significant increase. However, he also pointed out that the true inflation rate, as measured by the National Bureau of Economic Research, is actually below 1%. This is a crucial distinction, as it suggests that the inflation rate may not be as high as we think.
If you’re interested in getting a clearer understanding of the economy and what’s really driving the numbers, this episode is a must-listen. Doctor Will offers a nuanced and insightful look at the data, and helps us cut through the noise to get to the heart of the matter
Listen to the “Holiday Sales Report, The Market & Tariffs” discussion in full here:
Listen to the show in full here:
Watch the show here:
Archived episodes here:
ABOUT THE SHOW
Tony Katz Today airs from 12-3pm ET on 93.1 WIBC/Indianapolis
What are we talking about? Politics, breaking news, political theory, art, the markets, food, libations and whatever else may come to mind.
PLEASE SUBSCRIBE TO THE PODCAST
Tony Katz Today on Apple Podcasts
