Original Article By “Sundance” At TheConservativeTreehouse.com

Move along, move along folks… please do not pay attention to the fire raging downtown, the suburbs are so nice this time of year… move along folks, look shiny Ukraine thing over there…

When retail sales are calculated, they are calculated in dollars.  Any recorded increase in retail sales that does not exceed the price increases in those items is factually reflecting a drop in units sold.

Ex. – if you sell 300 items at $1.00 each, you have $300 in sales.  If you sell 250 items at $1.25 each, you have $312.50 in sales.  Technically, you have a 4.1% increase in sales.  However, you have sold 17% less items (50 units).

When you are selling less stuff, your business (economy) is contracting, not expanding.  We have been in this contracting cycle (an actual production recession) since May/June of last year; however, the contraction has not been recognized because massive inflation is hiding it.  That, my friends, is the painful truth and it spells big trouble ahead.

(AP) […] Retail sales increased 0.3% after registering a revised 4.9% jump from December to January, fueled by wage gains, solid hiring and more money in banking accounts, according to the Commerce Department. January’s increase was the biggest jump in spending since last March, when American households received a final federal stimulus check of $1,400.

Business at furniture and home furnishing stores fell 1% in February, while sales at consumer electronics and appliance stores slipped 0.6%. General merchandise stores saw business down 0.2%, while online sales fell 3.7%. Restaurant sales rose 2.5% as shoppers shift more of their spending to services as the threat of COVID-19 fades. (read more)

Take the figures above and compare them to the sector inflation in February (Table-2, BLS Report)  – Just sticking to what is above:

  • Furniture prices rose 0.8% in Feb, total furniture sales dropped 1.0%
  • Electronics and appliances rose around 1.8% in Feb, sales dropped 0.6%
  • Online sales items rose in price around 0.5%, sales dropped 3.7%

What this reflects is an actual contraction much greater than the dollar drop in sales.   In most cases the unit sales dropped at a rate six times the price difference.  If you reverse engineer the math, the average is approximately a 15% reduction in durable good units purchased.

In a very macro perspective, that means the U.S. economy overall has approximately 15% too much labor in the sectors associated with the categories of goods that people have stopped purchasing.  This means people working in the durable goods sector, production, assembly, transportation, delivery and retail sales staff, are about to get laid off work, RIF’d and downsized.

Math is math, and inflation clouds the realities of the economy.

Ordinary people are prioritizing spending and watching their wages get chewed up by higher prices for food, energy, fuel and housing.  If you live in a predominantly working class or blue-collar area, when you start seeing contraction locally, you can be sure it will show up nationally.

Prepare for a long-duration recession, combined with increasingly costly energy costs.

However, do not distress yourself with dark imaginings.  Instead, empower yourself.  Take action today to evaluate your expenses and then ask how can I lower those expense costs by modifying my habits?  Think strategically about convenience -vs- costs -vs- how much your own time is worth.

You may not need to modify anything.  Or you may need to reevaluate priorities in order to help your kids or grandkids.

Be wise.

Be the hero for your family.

Be strong.

Be proactive.

Above all, be thankful to a loving God.  No weapon formed against you shall prosper.

Stay humble in your expectations, stay connected to your stabilized core self, and embrace fellowship.

This too shall pass.

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