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Saturday 23rd January 2021
Hi Friend,
Retail Sales, End The Year With a Bang ...
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| Online Sales Up 61% ...
At first glance, the latest retail figures for December don't look very inspiring. Sales volumes were up by just 2.9% compared to prior year. The value of retail sales increased by just 1.3%. "Stay at home Britain, takes the fizz out of retail sales", the headline in the Times today.
It is important to drill the detail. Shoppers may well have been staying at home. They were taking the opportunity to shop on line. Online sales were up by 61% compared to prior year. Online sales, as a proportion of all retail, averaged 30% in the final quarter. The switch to food sales on line doubled to 11%. The proportion of non food sales, excluding petrol, was near 40%. The challenge for conventional retail is immense.
Dig deeper into the data, sales volumes, excluding petrol and fuel, increased by 6.5% over the final three months of the year. Food sales were up by 5%. Gardening products up 9%. Household products were up by 15%. DIY goods were up over 35%.
Losers in the spectrum were clothing, footwear and cosmetics. Smart clothing and high heels are losing out. Charles Tyrwhitt, interviewed in the Times today, bemoans the loss of shirt sales in shut down and worries about the casual trend to baseball caps and t-shirts.
Pretty Little Thing, on the other hand, celebrates the era of "Athleisure". "Athleisurewear, as everyday wear, is the new black. Still wondering if it's appropriate to wear yoga leggings all day? The answer is yes." You don't even have to, downward face the dog. It's OK just to wear, athleisurewear, without the work out.
In this "tale of two economies" analysis is critical. Consumers are spending on retail. They cannot spend in pubs, restaurants, hotels and travel. They will spend on homes and households. Housing activity in December, was the highest end of year performance, since 2006. House prices ended the year up 7.5%.
The economy ended on a strong note at the end of year. We expect the lost output in 2020 to have been around 10% for the year as a whole. Prospects for the current year, are overshadowed by the current lock down. We are assuming there may be some release of conditions before the onset of Easter Then growth of almost 5% could be possible for the year as a whole.
Andy Haldane, Chief Economist at the Bank of England expects the economy to increase "at a rate of knots" from Q2 onward ... always assuming, of course, we don't get tied up in knots, as government plans unravel ...
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| Taking All The Right Steps ...
The adults are back in the White House. Joe Biden is the 46th President of the USA. The inauguration brought a tear to my eye. I haven't been moved to tears, so much, since the last episode of the Repair Shop. New eyes, on an old Teddy Bear, always a tear jerker.
Old eyes on new challenges, an inspiration. The Biden Harris ticket is taking all the right steps, ticking all the boxes. A clear plan for Covid a priority. FEMA engagement, at Federal level, long overdue. Now even Anthony Fauci has a smile on his face. He admits working under Biden has that liberating feeling. It must be a shot in the arm, vaccine not bleach, of course.
The world welcomes back Uncle Sam. The US will rejoin the World Health Organization and commit once again to the Paris Climate Agreement. Biden will commit to Comax, the WHO effort to ensure a vaccine is made available to middle and low income countries. The decision on the Keynote pipeline will be reversed. The sale of sacred tribal lands to a fracking consortium now no longer a possibility.
A big economic stimulus underway. Janet Yellen promises big spending now, to avoid greater pain later. Jerome Powell at the Fed, is committed to monetary financing of fiscal deficits. The possibility of interest rates hikes pushed beyond the near term horizon.
No Muslim travel ban. No money for the Mexican wall. A return to a nuclear deal with Russia on the cards. A return to the international agreement with Iran, a probability. A commitment to NATO, Europe and traditional allies in the plan. We hope for rapprochement with China. An era of co-opetition the mantra. The era of competition left behind. A recognition, the Thucydides Trap is not written but as a warning ...
Trump has returned to Florida. The Senate impeachment trial will begin next month. A ban from ever taking public office again the prize. Former White House Chief of Staff, John Kelly told CNN, if it was up to him, he would vote to remove Trump. Former Attorney General Bill Barr, accused the President of "orchestrating a mob to pressure Congress". He went on to call his conduct a "Betrayal of Office".
There have been public appeals for Republican lawmakers to take action against Trump. Even the Proud Boys are surrendering support. "Trump will go down as a total failure" the message on Telegram. No more hails to the chief, hailstones and brickbats to follow ...
That's all for this week, stay safe, hands, face and space ... it's tough out there, stay in touch ...
John
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| © 2021 John Ashcroft, Economics, Strategy and Financial Markets, experience worth sharing.
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