Retail sales are booming. Consumers have had pent up demand to spend and they are now spending. US retail sales surged 1.9% month-over-month in October. This was after an upward revision to 0.8% the previous month. This is the third month in a row of higher month-over-month retail sales.
When viewed at a year-over-year level, sales are well above their previous average.
This is a direct result of the COVID payments that went out directly to consumers. At the time, the personal savings rate when through the roof. It has now rapidly come back down signaling that consumers are opening their wallets and spending what they have.
We are also seeing a move higher in credit card use.
This is massive buying pressure at the consumer level. Retailers are experiencing strong buying. In fact, Walmart announced their earnings and it was a total blowout.
They are seeing increased same-store sales from the pre-pandemic era. Consumers are out in full-force buying with both fists.
Walmart also increased their forward guidance for 2022. They see strong sales in the coming year. This is because they believe as prices rise, consumers will turn to the “everyday low price” retailer to attempt to save money.
A massive consumer buying splurge is underway. I expect the whole fourth quarter will see tremendous spending at retailers. This will add upward pressure on prices. The big money pump from 2020 has arrived in force.
In addition to the 2020 money pump, the Biden administration looks to add to the pile by signing into law the infrastructure bill. This will be monetized by the Federal Reserve. Look for an increase in the money supply towards the end of the year. This will be reflected in the H.6 money stock report.
I expect there to be quite a “Santa Rally” at the end of the year. This will be especially true for gold and silver as the herd begins to pivot. The amount of money that is washing around in the economy and the expectation of more coming will help aid the market to continue it’s climb of the wall of worry.