Charting the Global Economy: Retail Sales Firm in U.S., China

(Bloomberg) -- Retail sales strengthened in both the U.S. and China last month, suggesting still-healthy consumer spending in the two largest economies even against a backdrop of rising prices.

Price increases continue to broaden, supporting the idea that inflation will prove more persistent than thought. The cost of goods and services from tobacco to electricity rose in the U.S. last month, while energy costs in the U.K. helped drive inflation to the highest reading in nearly a decade. 

Meantime, Europe is once again resorting to lockdowns and imposing restrictions on the unvaccinated to stem the latest wave of Covid-19 infections that threatens to overwhelm the continent’s health systems.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

U.S.

Federal Reserve Chairman Jerome Powell’s inflation dashboard is starting to show some signs of overheating. From spreading price increases to rising wages, it’s signaling more caution on the inflation front than when Powell unveiled the benchmarks less than three months ago.

Retail sales rose in October for a third month, signaling households continue to spend even with the fastest inflation in decades. The value of purchases increased 1.7%, the most in seven months. The data aren’t adjusted for price changes.

Europe

U.K. inflation climbed more than expected to the highest in a decade, tightening a squeeze on living standards for households. Consumer prices rose 4.2% in October from a year ago, driven by energy costs and the impact of broad-based supply shortages across the economy.

Inflation is dealing a fresh blow to the low-income workers whose finances fared worst when Covid-19 swept across Europe. Many toward the bottom of the pay scale burned through savings as lockdown-induced furlough programs only partially covered their wages. Now, soaring energy and food costs are swallowing a disproportionate chunk of earnings to complete a double whammy.

Asia

China’s economy performed better than expected in October as retail sales climbed and energy shortages eased, though a slump in property and rising Covid outbreaks show the recovery isn’t yet on solid ground. Industrial output rose 3.5% in October from a year earlier, while retail sales growth accelerated to 4.9%, beating economists’ forecasts.

Japan’s exports increased in October at the slowest pace in eight months as car shipments continued to slump, adding to signs that global supply constraints are still weighing on the economy.

Emerging Markets

Pakistan’s central bank raised its key interest rate by more than expected in a second consecutive hike aimed at arresting Asia’s fastest inflation and stemming a decline in the rupee.

South Korea’s household income increased by a record last quarter, bolstered by a recovering economy and cash handouts from the government’s pandemic relief plan.

The money that foreigners globally send to their home countries is set to reach a record this year, fueled by transfers to Latin America and migrants headed for the U.S., according to forecasts from the World Bank.

World

Financial markets are fixated on how the world’s central banks will adjust monetary policy as they grapple with inflation. But it’s fiscal tightening -- the withdrawal of pandemic spending -- that will likely have more impact on the global economy next year.

Austria will become the first western European country to impose widespread restrictions after curbs on unvaccinated people failed to stem a surge in new infections. It will also become the first European country to mandate Covid-19 shots as it seeks to exit the crisis.

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