Santa moving supplies with a forklift

Will inflation, supply shortages dampen the holiday shopping spirit?

Financial Commentary
November 29, 2021

Ted HansonBy Ted Hanson
Securities Analyst

 

The holiday season is officially upon us. Gift giving is one of the many traditions during the holidays. Purchases made this time of year help drive our economy as consumer spending makes up over two thirds of the U.S. gross domestic product (GDP). Many have already begun their holiday shopping as they take advantage of deals and savings. Let’s take a look at some early indicators of how this holiday season is going.

Spending

Personal spending, which indicates how much money Americans are spending on goods and services, rose 1.3% in October compared to the prior month. Spending on goods rose 2.2% and services rose 0.9% last month, both ahead of expectations. The increase in spending combined with a 0.5% rise in personal income point to stronger demand.  Demand should remain strong through the remainder of the year.

chart

Supply

It’s no secret that suppliers are struggling to keep up with the increase in demand. Global supply-chain issues continue to weigh on many industries. There’s a long way to go, but some industries hinted at easing supply constraints. For example, U.S. production of vehicles in October rose 18.8% compared to the prior month. In addition, many retail chains reported they were able to stock up inventories for this holiday shopping season. Both are positive signs of companies’ increased investment to meet the high demand.

Overall, demand remains high and supply continues to recover. October was a strong month for the consumer and kicked off the holiday season on a positive note. Consumer data is one of many economic indicators we look at when gauging the U.S. economy’s health. While it is important to understand the role each indicator has on the economy, we continue to look at the big picture and focus on the long term. This proves to be valuable as we work with our clients to achieve their financial goals. Reach out to your advisor today to discuss your portfolio. We are thankful for the opportunity to serve you.

About the Author

Ted Hanson

Ted Hanson is a Portfolio Manager within the Wealth Management Division at Security National Bank. He serves customers by managing client portfolios, analyzing securities and performing daily trading activities. Ted is a graduate of Morningside College with a degree in finance and accounting. He started at SNB in 2017.

Related Articles

How to Master the Psychology of Judgement in Investing April 22, 2024

Daniel Kahneman is best known for his work on behavior and the psychology of judgement in decision making. Kahneman and his colleague Amos Tversky’s research laid the foundation of behavioral economics/finance. Their research demonstrated people often make mental errors and have cognitive biases, this was contrary to most classical economic models at the time, which were based on a “rational being” to explain people’s economic decisions. The world of behavior finance continues to expand building on the foundation of Kahneman’s early research.

Spring Cleaning:  Time to Cultivate Your Financial Plan April 15, 2024

As the old adage goes, April showers bring May flowers. Depending on where you are from or walk of life, this proverb can take on many meanings. The way I interpret the classic saying is that April represents a time for preparation. A time to do some spring cleaning and tackle projects neglected during the winter months. For farmers, it means a return to long days in the fields. For accountants, it signifies the conclusion of an arduous three months of tax preparations. At Security National Wealth Management we feel now is a great opportunity to assess your financial plan and ensure you are on the right path to achieving retirement goals.
Look What's on the Verge of a Major 40,000 Milestone April 1, 2024

In early December 2020, my colleague, Michael List, published an article marking the Dow Jones Industrial Average hitting the 30,000 milestone. In that article, Michael describes four different methods that each provide us with an educated guess as to when the Dow would cross the 40,000 milestone, with guesses ranging from two to six years. Michael said that the 40,000 milestone probably would be here faster than we expect but that it ultimately would leave us with more questions, e.g., when would the Dow reach 50,000? And now, about 40 months later, or 3.33 years, the Dow is approaching 40,000, causing us to guess when it ‘turns’ 50,000. To continue our analysis, let’s use the same methods utilized by Michael to predict the arrival of the Dow at 50,000.