Taps Coogan – July 8th, 2021

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The following chart, from Bank of America via Robin Wigglesworth, is a real doozy. It shows the difference between the trend in the number of people working and the amount we are all are spending on retail sales. To note, nonfarm payrolls is a measure of the number of employees working in the US and should not have the ‘$’ unit shown on the chart.

Presumably, the goal of the various rounds of stimulus checks and expanded unemployment, PPP loans, etc… was to keep consumer spending and economic activity from dropping too much during the recession. In practice, those programs were so over-done and poorly targeted that consumer spending spiked to record levels.

It will be interesting to see what history has to say about the prudence of pulling forward years and years of goods spending in a stimulus free-for-all and then keeping the show going for months and months after record job openings had become available.

Like so many other charts these days, simply returning to normal on retail sales would look an awful lot like a recession.

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