The first quarter of 2022 started with a drop in U.S. consumer spending on non-essential durable goods like electronics. Inventories of goods started to build and by April/May of 2022 the Consumer Price Index (CPI) showed negative inflation in those sectors as discounts were offered.
July manufacturing output contracted for the first time in 2 years in South Korea
- Output fell for a fourth straight month and by the sharpest rate since October 2021
- All economies that depend on the manufacturing and export of durable goods are likely now seeing reduced factory outputs as fewer customers exist to purchase the final product
Consumer belt tightening
- As less and less disposable income is available, consumer spending gets increasingly prioritized
- Inflation in general eats away at the ability of consumers to purchase products and services
- Energy inflation is particularly damaging as it hits every sector of the economy with higher supply-side costs
- Food prices, fuel, transportation costs, electricity rates etc.
- By the end of July, the second quarter GDP in the U.S. again showed a contraction of 0.9%. Energy inflation was now creating a consumer spending recession, demand for non-essential goods dropped fast over the first half of the year.
- SEOUL, Aug 1 (Reuters) South Korea's factory activity shrank in July for the first time in nearly two years, as output and new orders weakened amid continued inflation and supply chain woes, a private-sector survey showed on Monday.
- Inventories of goods started to build and by April/May of 2022 the Consumer Price Index (CPI) showed negative inflation in those sectors as discounts to move inventory were offered.
- The first quarter of 2022 started with a drop in U.S. consumer spending on non-essential durable goods like electronics.
- We are seeing the cascading impacts of the energy-driven inflation starting to ripple throughout the globe, specifically worsening economies who are dependent on the export of non-essential durable goods.
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