Consumers are Surrendering to Inflation
Recent earnings numbers from McDonald's, Kraft, and Coke confirm that Bidenomics is turning into a two-speed affair. With plenty of wealth at the top and plenty of pain for normal people.
Last week I joined Charles Payne, one of my favorite people on Fox, to talk about it.
In short, McDonald's, Coke, Nestle, Starbucks, and Pepsi have all now flagged that low-income consumers are no longer able to absorb inflation.
They're cutting back on visits and they're cutting back spend, leading to a nationwide drop in traffic and sales across fast food and even basic groceries.
McDonald's reported same-store sales are down 3%, and transactions dropped 7% -- outpacing 4% price hikes to keep up with inflation.
Pepsi reported a 5% drop in sales, Nestle had an 8% drop for Hot Pockets, frozen pizzas and Stouffer frozen dinners. Kraft Mac n Cheese, Pringles, Pop Tarts are all sagging.
Starbucks is losing the low end altogether, with its stock plunging 14% after turning in lower revenue, transactions, and ticket-size, while losing fully 1.5 million loyalty-reward users.
The CEO blamed "macro headwinds." Meaning lower-end consumers squeezed by inflation and weak wage growth.
Headwinds is quite the understatement: Nestle's chief financial officer estimates the loss in discretionary purchasing power among low-income since Biden took office has come to roughly half.
Plenty of Cake at the Top
It's a whole nother reality on the high-end, where sales are doing fantastic. Molson reported strong growth in pricier beers as more consumers "treat themselves."
More broadly, the luxury ETF LUXX, which includes brands like Hennessy, Hermes, and Ferrari, is actually up 20% in the past 6 months as the wealthy gobble up their Balenciaga and let the poors eat TJ Maxx.
In fact, just a few months ago Lamborghini announced they'd sold 10,000 cars for the first time in history. A third of them in the US, and mostly the Urus SUV that goes for $237,000 -- 269 for the performance model featuring carbon ceramic brakes with subtle off-white coloring and a watermark.
Bentley also reported record sales, with Aston Martin and Rolls Royce close behind. One analyst summed it up as a "K-shaped economy,” with very different realities for those at the top and those at the bottom, reflected in strong credit card spending at the top paired with rising delinquincy rates for the rest.
What’s Next
The rich will keep getting richer, and everybody else will keep getting inflation, because that's how the Fed works, and it's how crony government spending works.
The Fed's 6 trillion dollar money-printing orgy and the 8 trillion in deficit spending since the pandemic have flooded money to anybody who either already owned assets -- rich people -- or was lucky enough to work at a politically connected company or government contractor.
As always, government money goes mostly to the powerful, with an obligatory slab for vote-buying at the bottom. And nothing for the middle-class but taxes.
The solution's very easy: a dollar-first monetary policy -- ideally ending the Fed. Along with ending the deficits so Americans aren't forced to run just to stay on the treadmill.
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We are talking about economy as if it were some horse race, completely ignoring the ultimate goals our Rulers desire. KOVID showed us they want us enslaved, sick, infertile and dead. What happens to the economy as they begin to get closer to achieving their goals? What kind of living, what kind of the world this will be? Let’s start from there and walk back. We might learn some invaluable lessons that just might help us save our humanity before it is too late.
Everything is going right on schedule for the Democraps and Elite. First bankrupt the country and raise inflation to new highs that the average consumer cannot afford. Next tell the people that the government will fix it if they will allow them to take over their lives. If this doesn't work, create another cataclysmic terrorist explosion of minor Nuclear proportions, or better yet do something that will cause a major threat to the government that will allow them to declare martial law and suspend the Constitution. Then watch them complete their plan to overthrow the country and install a dictator. In fact everything they say that Trump wants to do, just watch! Just saying!