The Economy Is Weakening - Channel Your Inner Volcker

 The US economy is weakening very fast, much faster than most analysts are currently predicting.  

Witness yesterday's announcement by Walmart CEO: "The increasing levels of food and fuel inflation are affecting how customers spend", he said and went on to announce that earnings would drop by 13-14% this quarter, squeezed between lower demand for durable goods and non-essentials like clothing, and having to heavily discount to clear inventory.  This is Walmart's second negative announcement in just 10 weeks, which shows just how fast things are unravelling at the consumer front.

Walmart is the world's largest retailer, so what's going on there is an indicator for consumer spending trends everywhere.

There are those who are attempting to interpret this as good news for markets. Oh, since we are going into a recession the Fed will stop tightening aggressively, they posit. Well, maybe - if Powell and Lagarde prove to be totally spineless and whipsaw monetary policy back and forth. If so, inflation will become even more entrenched. Witness the German labor union for Lufthansa's ground-handling workers: they are demanding an immediate 9.5% pay hike and are going on a one day strike this Thursday. Can you blame them? With basic consumer good prices soaring well over 15%, workers need immediate real income relief.

Note to Powell and Lagarde: Channel your inner Volcker and stay the course, your duty is to the wider public not to financial markets. In fact, since you are still not doing much on the QT front, you should double down and announce truly substantive money supply shrinking measures.  Nothing else will work to kill inflation fast.