Daily update
Daily update
- The Wile E Coyote effect—running off the edge of a cliff, and continuing to run before eventually gravity takes over—remains evident for developed economy consumers. UK March retail sales (which adjust for price effects) showed rising volumes of oil and non-oil sales. The surge in oil volumes means part of the UK’s oil reserves are stored in consumers' cars. The stronger non-oil sales signal consumers will cut savings rates to maintain (or increase) living standards. This cannot carry on forever, but economic gravity has yet to exert itself.
- Japan’s national March consumer price inflation data showed a slightly larger oil effect than had been expected—other prices increased in line with the consensus. The Japanese government used fiscal policy to limit energy price increases in March, but this will fade.
- German April ifo business sentiment will remain subject to the wild swings in sentiment around the war. Whether an individual entrepreneur is optimistic or pessimistic might depend on which day they chose to answer the survey.
- US Michigan consumer sentiment data for April offers little of value in the headlines. Reported sentiment by political party might be useful—not as a signal of changes in behavior, but as an indicator of whether political pressures might start to build.