16 Apr April 16, 2021
Week in Review
Retail Sales
Retail sales exploded in March, increasing 9.8%. Sales are up a whopping 27.7% over the last twelve months.
Our Take: March stimulus checks, high savings rates during the pandemic, and pent-up demand coupled with a loosening of restrictions caused retail sales to skyrocket. Sales should remain strong in the near future as more consumers receive their checks from the government. The hope is that increased demand leads to a pickup in hiring and a self-sustaining recovery as opposed to a rush of activity which peters out once government stimulus stops.
Inflation
Consumer prices rose 0.6% in March. Prices increased 2.6% year-over-year.
Our Take: Inflation is clearly picking up on a monthly basis, due in large part to supply bottlenecks and government stimulus, and an annual basis as monthly inflation declines early in the pandemic drop out of the year-over-year CPI calculation. The question which has yet to be answered is whether the pickup in inflation is transitory or not. The Fed believes the reasons for increased inflation will last just a few months followed by a return to a disinflationary environment. This is their basis for keeping short rates near zero. Time will tell if they are right.
Municipals
The Wisconsin Assembly passed legislation that would eliminate sales tax at bars, restaurants, and certain entertainment venues from June 1 through August 31. The tax holiday is intended to help businesses affected by the pandemic and received bipartisan support in the Assembly. The measure will move to the Senate, where support is uncertain.
Our Take: Should the holiday take effect, estimates show that the state would miss out on $160 million of sales tax collections while counties would miss out on $12 million of collections. There is currently no plan in place to help the state and local governments recoup the lost revenue. Lower than expected revenue collections could affect state and county operations.
All expressions of opinions are subject to change without notice in reaction to shifting market conditions. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities and should not be relied on as financial advice.