Because, Mujagic points out, although the inflation data was disappointing, inflation was still falling. “Everything fits together well,” he says. “We in the Netherlands have a good habit of pointing out the good points when things go wrong, and we make comments when everyone is celebrating.”
And so even if the Americans do it, because Mujagic dares to comment on the revelry. For example, the 3.5% growth figure would not have been adjusted for inflation. If that correction is applied, according to Mujagic there will still be growth, but less. He also points out that January is known as a sales month, where people spend more than in other months.
Seasonal adjustment
It also says there is a seasonal adjustment. “But that goes for all macroeconomic data,” Mujagic continues. ‘US Bureau of Statistics says July doesn’t equal January, so a seasonal adjustment is applied. That translates into growth now, but if you look at the actual numbers, you see that Americans spent $750 billion in December.
And that’s in stark contrast to the current $630 billion spent by Americans in January, despite the 3.5 percent increase. “The seasonal adjustment effect is huge.”
Already seen
The sales data therefore shows a parallel with the positive January employment data. “Then there was also a great seasonal adjustment effect,” continues Mujagic. “So without too much imagination you can conclude that things aren’t going too badly, but not that well either.”
Mujagic also reminds us that the mild winter played a big role and that the benefits of 65 million Americans – like every year on January 1 – have been adjusted. This year saw the largest adjustment since the 1980s. According to Mujagic, this is partly due to inflation, but he also notes that consumer confidence has been on the rise since the summer of 2022. “If you are less gloomy about the future, it will be easier for you to spend your money. All of that played a part.”