January 18, 2023, 7:29 pm EST
Holiday Retail Sales Declined
The stock market plummeted more than -1% with Dow Jones down -613 points to reflect disappointment in December 2022 retail sales.
Retail sales in the US declined 1.1% month-over-month in December 2022, following an upwardly revised 1% drop in November and worse than forecasts of a 0.8% fall. Sales at gasoline stations recorded the biggest decrease (-4.6%), followed by furniture stores (-2.5%), motor vehicle dealers (-1.2%), electronics and appliances stores (-1.1%), miscellaneous (-1.1%) and nonstore retailers (-1.1%). In contrast, sales were up 0.3% in building materials and garden equipment stores (0.3%) and sporting goods, musical instruments and book sellers (0.1%). Sales at food and beverage stores were flat. Retail sales aren’t adjusted for inflation and part of the decrease in December can be explained by a fall in goods prices during the month and a holiday shopping that was pulled forward into October. However, excluding sales at gasoline stations, sales were down 0.8%, in another sign of a weaker-than-expected holiday shopping and a slowdown in consumer spending amid high inflation and interest rates. source: U.S. Census Bureau
Poor retail sales were the outcome of high inflation, rising rates, and worry about the economic outlook.
Another round of massive layoff announcements from Microsoft (MSFT) on cutting 10,000 positions and Amazon (AMZN) trimming 18,000 jobs echoed the upcoming slowdown.
Inflation is going to remain high for months ahead even if it peaked out already. The interest rates are going to rise in 2023 because of evaluated inflation. We think the US economy would keep going downhill for the first half of 2023. Recession may arrive in the second half of 2023.
Thus, the potential bankruptcy of the retailer Bed Bath & Beyond (BBBY) is simply the beginning of the wave for a much tougher time in the future.
The investment strategy should gear toward higher cash levels and strong holding positions in this environment.