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John Authers

Covid Fear Shows Signs of Returning to the Stock Market

The leisure sector is turning down again as infections rise. This could scramble many calculations.

German hospitals are filling up.

German hospitals are filling up.

Photographer: CHRISTOF STACHE/AFP/Getty Images

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Consumers in the U.S. are worried and unhappy. That usually portends a drop in consumption, but not last month. Instead retail sales excluding food and autos gained 16.1% over 12 months, by far the greatest annual increase this century if we exclude the freak April number, caused by comparison with the retail slump of April 2020. This doesn’t look much like stagflation, and it doesn’t look much like a lack of consumer confidence:

Maybe not so fast. There is an argument that this is the fault of inflation (buy now before the price goes up) and particularly supply bottlenecks (put in your orders for Thanksgiving and Christmas early this year, or you’ll be at the back of the line and never see it). So the reception to these numbers showing that U.S. consumers were still doing their bit to help the world was less rapturous than it might have been. There is still a theory, albeit a tenuous one, that in this environment spending more money is a symptom of low, not high confidence.