Retail Sales Fall, Fed Raises Interest Rate by Historic .75 Percentage Point

And, in the it-can’t-get-any-worse department, it just got worse. The Commerce Department reported Wednesday that retail sales declined by 0.3 percent seasonally in May compared to the previous month. This was the same day as the Federal Reserve raised its interest rates by .75 percentage points, its largest increase since 1994.

According to Wall Street Journal, this was the first drop in retail sales month-over-month. The Federal Reserve is moving to lower the interest rate, which will slow down raging inflation that is at an alarming 40-year high. Joe, you did it!

Don’t worry, the stock market is still available. That’s only 16 percent off for the year.

We previously reported on the Biden Administration’s belief that they have everything under control.

Karine Jean-Pierre says Biden’s $2 trillion stimulus “has put us in a place where we can actually, uh, put us in a place where the American people feel, can, can — can actually — we can take on inflation.”

Then she says we’re in “a good historic economic place.” pic.twitter.com/37rL39LjwD

— RNC Research (@RNCResearch) June 14, 2022

The Fed will raise the benchmark federal-funds rates from 1.5 percent to 1.75 percent with its rate hike. Jerome Powell, the Fed chairman, stated at a press conference that “We are not trying to incite a recession now.” That’s quite reassuring.

From the Journal:

He said that it was becoming harder to achieve what is called a soft landing. This is when the economy slows enough for inflation to be controlled while still avoiding a downturn. This implicitly acknowledged that there could be a downturn as the economy adjusts to tighter monetary policies.

Powell stated that “it is not going to be easy.” There’s a greater chance that it will depend on external factors we can’t control. We may lose that option due to fluctuations and spikes in commodity prices.

Hoo boy. This sure does sound like a possible recession.

Investors hoped that the rate announcement would reduce inflation and stock markets rose slightly. But, such a big increase in rates will make it more difficult for consumers to get credit cards, raise their mortgage rates, increase their adjustable-rate loan payments, and increase the cost of car loans.

Retail sales have dropped in the meantime, which indicates that there is a slowing economy. This is because consumers are reluctant to buy as inflation has impacted their budgets. Bloomberg

These figures indicate that Americans are less inclined to purchase merchandise. This could be due to the effects of the highest inflation rate in 40 years, or a greater preference for services such as travel and entertainment. Higher interest rates or higher prices will cause spending to drop as price pressures become more ingrained in the economy.

My opinion: The gas prices are so high, that people are in shock. By the time they finish filling up their tank, they aren’t in the mood to stop by the Banana Republic to grab a few shirts. People are afraid and will hold on to their cash whenever they can.

The biggest drop was in car sales which dropped 3.5 percent in May. It’s not surprising, it’s true. I don’t know if you’re surprised, but as long my car works, I don’t think I’d feel the need to replace it right now with all this uncertainty.

Although some people may view the Federal Reserve raising interest rates as a positive thing, it will still shock consumers. Anyone who carries a credit card balance or needs a loan at adjustable rates is in for a shock. The drop in retail sales is an indicator of what’s to come, namely that consumers will keep their hands in their pockets.

Although the Biden administration has many spokespersons who can tell us how optimistic this economy is, the numbers don’t lie.

The post Retail Sales Fall, Fed Raises Interest Rate by Historic .75 Percentage Point appeared first on Conservative Research Group.

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