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We do not subscribe to the premise that the consumer is not weakening. If PCE were adjusted for the true cost of price inflation, total real spend would be down year-over-year. We believe that unit sales are down year-over-year across most categories and that “growth” in consumer spending is a function of unit price increases.
- Housing is softening (HERE);
- Credit is more expensive (HERE);
- Equity indices (S&P, NASDAQ, Russell 2000), are down double-digit percentages year-to-date (HERE);
- Food prices continue to rise. Real world food price inflation is higher than the reported CPI figures for food-related categories. We estimate 40% year-over-year price increases for both the “Food at home” and “Food away from home” CPI categories;
- Household debt continues to increase (HERE).