The Bureau of Labor Statistics said yesterday that prices rose 5.3 percent in August compared with a year ago, but the Washington Post writes that the numbers suggest that "inflation showed early signs of easing amid the ongoing coronavirus pandemic … The August data breaks an eight-month streak of rising or steady inflation — and is a welcome sign for policymakers at the Fed and the White House, who argue that inflation will start to cool down as the economy heals. Their expectation is that as supply chains catch up with consumer demand, prices will land closer to the Fed’s 2 percent annual target for inflation."
At the same time, the US Census bureau said that "median household income was roughly $67,500 in 2020, down 2.9% from the prior year, when it hit an inflation-adjusted historical high. The decline came as the U.S. last year witnessed the worst economic pain in more than a decade, with millions losing their jobs and national unemployment soaring from a 50-year low to a high of 14.8%.
"The last time median household income fell significantly was 2011, in the aftermath of the 2007-09 recession."
- KC's View:
Experts - and to be clear, I am not one - seem to feel that while the inflation numbers are encouraging, there remains considerable uncertainty about what is going to happen next. Inflation may indeed be transitory, but a lot of folks won't be surprised if it is sustained over an extended period of time.
As for income … well, the feeling here at least is that we could see a dramatic shift in the income numbers when folks get back to work and reap the benefits of wages that seem to be increasing because of the labor shortage.
As for retailers … they continue to have to calibrate their offerings for an economy that remains in flux and hard to predict.