Despite inflationary pressures, consumers are continuing to spend – February retail sales increased 7.9% over 2022, with food services/dining up 15.32%. The Consumer Price Index increased 6.0% YOY, with Core CPI up 5.5%; the index for shelter was again a large contributor to the monthly all items increase, accounting for over 70% of the monthly all items increase, with the indexes for food also contributing. Gas prices continue to remain stable –average price per gallon nationally declined 16% YOY –$ 3.51 / gallon nationally through early March vs. $4.20 last year.
The Consumer Sentiment Index rose 3.2% (2.1 index points) above January; consumers continued to express uncertainty over short-run inflation, thus their expectations may be unstable in the months to come. Personal disposable income rose 6.2% in January 2023, exceeding Core CPI of 5.5% and personal consumption expenditures increased 6.1%. Of concern is the rising level of consumer debt. Revolving credit debt continues to climb, increasing 15.5%, and as consumers continue to take on more debt and deal with the impact of inflation, hardship withdrawals from 401(k) retirement accounts have reached record highs.
Retail inventories were up nearly 12% over LY. While a large portion of this is due to the inflation in COGS (Cost of Goods Sold) and transportation, companies are still chewing thru excess inventory with heavy markdowns, while cutting back on orders and a meager outlook for the balance of the year.
In this month’s edition we provide a ‘sneak peek’ at Q4-2022 performance from the earnings season – look for a special report in the next few weeks with our assessment and 2023 outlook.
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