WSM - 'True' Inflation Is Higher Than The 'Official' Numbers

2024-05-29 09:43:02 ET

Summary

• Despite solid headline economic numbers and equities continuing to make all-time highs, a good portion of the consumer population is under increasing duress.
• One of the key reasons for this in my opinion is that true inflation levels are higher than 'officially' being reported, impacting the majority of the consumer population.
• This is contributing to the bifurcation or retailer results that came across the wires in the first quarter and why inflation remains 'sticky'
• This could also lead to an increasing probability of Stagflation, which would not be good for the economy or the markets.
• Why inflation is likely much worse for many segments of the population than the monthly CPI readings are showing is highlighted in the paragraphs below.

Equities continue to hit all-time highs and the unemployment rate remains below the four percent level. And yet less than a quarter of U.S. citizens believes the country is heading in the right direction according to the latest polls. In addition, consumer stalwarts like Home Depot ( HD ) , Target ( TGT ) and Starbucks ( SBUX ) all experienced declines in same-store sales within their first quarter numbers and provided commentary around a weakening consumer. McDonald's ( MCD ) is bringing back its $5 combo meal despite resistance from franchisees, albeit for a limited time. Burger King just announced it plans to do the same....

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