11/21/2022
📈Monday Markets📉
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💬”As Americans head to the grocery store this week to stock up on ingredients, they may be frustrated to discover that the cost of a Thanksgiving dinner is a whopping 20% higher than last year, according to a survey by the American Farm Bureau. However, while higher inflation may be pinching consumer wallets, recent economic data still point to a resilient consumer.
💬Following upward revisions to prior months, retail sales jumped by 1.3% in October and on an inflation-adjusted basis, sales still rose by 0.8%. The retail sales control group, which excludes sales on gas, food, autos and materials, also rose a solid 0.7%. Last year, consumers shopped early and spent more to secure gifts as stores struggled to keep shelves stocked amid shipping delays.
💬This year, major retailers are sitting on excess inventories and potentially facing a more conservative consumer. However, while consumers may be running down their excess savings from the pandemic, down from a peak of $2.0tn to $1.0tn as of September, softening inflation and low unemployment should lift real wage growth and consumer sentiment in the months ahead, supporting overall consumer spending.
💬Price discounts from major retailers may also help lure consumers back to the storefronts this season. We still anticipate a consumer squeeze in 2023, given a very low personal savings rate and climbing consumer credit balances, but Americans should be able to eat, drink and be merry—at least for the next few months.”
- JP MORGAN ASSET MANAGEMENT
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