7 minute read
Real Retail Sales Show that the Consumer Has Stagnated for Years
- Real retail and food-service sales have barely budged since 2021, showing that the “resilient consumer” is running on fumes, not growth.
- Inflation is propping up spending headlines - prices are up, volumes aren’t - a classic sign of demand destruction.
Why it matters: When retail sales numbers rise only because prices do, it’s an early sign of demand destruction. Flat "real" sales mean consumers aren’t buying more - just paying more for the same or fewer goods, a classic warning light before slowdowns.
Now the Deep Dive: For years, analysts have said the U.S. consumer is holding up.
And sure, looking at growth in retail sales - it appears so.
Spending keeps climbing, restaurants are busy, and credit card balances are at record highs.
But as I’ve commented before - this only tracks nominal retail sales. If we strip out inflation - aka “real” retail sales - it shows a much more troubling picture.
Put simply, the spending boom ended four years ago. We’ve just been paying more for the same basket of goods.
Think of it like this:
- Nominal is your gross paycheck.
- Real is what it actually buys.
- If prices rise faster than your pay, your real spending shrinks.
That’s exactly what’s been happening. Real spending power peaked back in 2021, and since then the chart has gone sideways. The spending boom ended four years ago - we’ve just been paying more for the same basket of goods.
This is what economists call demand destruction.
- Prices rise faster than wages.
- Consumers exhaust savings or credit.
- Eventually, spending plateaus, stagnates, then declines.
This is how slowdowns can start - not with a crash, but through a hundred paper cuts adding up - things like higher costs for groceries, gas, rent, travel, and interest on all this debt.
If real demand doesn’t recover soon, history suggests the next move won’t be a “soft landing” - but rather be a diminished consumer that forces companies to discount, crush margins, and shed jobs
Thus, while markets keep cheering “resilient demand,” the real numbers don’t cheer back.
The Great Turkey Squeeze: Why Lower Prices Today May Mean Higher Costs Tomorrow
- U.S. turkey production has fallen to its lowest level in 40 years, while wholesale prices sit near $1.35 a pound - up from 94 cents last year.
- Even with temporary retail discounts, a smaller flock and changing consumer demand point to more expensive turkeys for years, not months.
What you need to know: Turkey supplies are tightening just as demand peaks, with the USDA projecting 2025 production at a 40-year low as avian flu, farm closures, and changing diets drive wholesale prices up 44%2.
Why it matters: With production at 40-year lows, turkey shortages don’t just affect Thanksgiving - they raise costs across the food chain. Retailers may absorb the hit this year, but persistent supply gaps mean higher grocery prices and tighter budgets ahead.
Now the Deep Dive: Turkey production in 2025 is set to hit its lowest level in four decades.
That’s right - the same bird that was the post-WW2 symbol of abundance is now falling off the table.
- For context, Americans went from eating about 5lbs of turkey a year in 1945 to nearly 18.5lbs in 1996 (a little more than 5x growth), but that number has since slipped to just over 13 pounds today (down ~30% since that peak).
Why? Partly changing diets, but mostly because of how expensive it has become.
Recurring avian-flu outbreaks, smaller flocks, and shuttered plants have all thinned Turkey production – thus pushing wholesale prices up roughly 44% this year to around $1.35 per pound (the highest in decades).
But, even with all this supply destruction – you may have noticed that turkey prices at the store aren’t as high. If anything, they’ve dropped in prices according to various measures.
So why are turkeys cheaper at some grocery stores? Because retailers are taking the hit - selling birds at a loss to get shoppers in the door to buy other Thanksgiving dishes.
But keep in mind – this is a short-term tactic, not a long-term trend. Once the holidays end, those higher costs will likely flow through the rest of the food chain.
Fewer farms, smaller flocks, and recurring supply shocks mean any disruption - a flu wave, a feed shortage, or another plant closure - can send prices surging even higher.
The point is, this year’s cheaper turkeys are a mirage.
The long-term trend still points to scarcity, consolidation, and higher costs.
Unless supply rebounds or demand cools, turkey prices - and grocery bills - may keep drifting higher well after the leftovers are gone.
The Shrinking Middle Class: Why “Richer” Doesn’t Feel Better - and “Poorer” Feels Hopeless
- U.S. households earning more than $150,000 (inflation-adjusted) now make up 34% of the country — up from just 5% in 1967.
- Yet the share of middle-income households has dropped to a record 45%, while the cost of a “middle-class lifestyle” now hovers near $130,000–$150,000.
What you need to know: The middle class is shrinking as more households move into the upper-income bracket - but with living costs soaring, many are learning that making more doesn’t mean getting richer3.
Why it matters: The American economy is increasingly growing fragile as wealth inequality widens. Childcare, housing, healthcare, and taxes have continued to outpace wage growth so that even two full-time earners struggle to feel “middle class.” Either you own assets to offset the rising cost of living – or you flounder. The middle ground is collapsing fast.
Now the Deep Dive: I found this chart from the U.S. Census Bureau equal parts fascinating, troubling, and slightly misleading.
At first glance, America looks richer than ever. Roughly ~33% of households now earn more than $150,000, a level once reserved for the upper layer.
- To put that into perspective, that number was just 5% in 1965.
And while that’s great – there’s an issue with this.
I’m talking about the middle class getting thinned out to its lowest share on record - just 45%.
That’s down 11% in a single generation.
Worse is that the lower-income share shrank too.
So yes, while the “average American” has technically climbed the income ladder - the rungs have moved.
Why? Because the price of being “middle class” has inflated faster than the income that defines it.
For example, a modest family budget now runs between $125,000 and $150,000 a year in many U.S. cities. That means households technically labeled “upper middle class” are living the same lifestyle the old middle class once could - just with bigger paychecks and much lower margins.
- That’s why people say, “Our parents had it easier.” Because it really does financially feel that way.
Put simply, the middle class isn’t dying - it’s just being squeezed upward or lower.
Now, of course, in broad terms, America’s wealth has risen across all brackets (even the lower ones). But the feel of prosperity hasn’t.
Thus, that gap - between what the data says vs. what people feel - is what drives populism, resentment, and the sense that the economy may be “rigged.”
Sure, Americans are richer (household wealth hit a record high of $167T in Q2-2025). But they’re also paying more, saving less, in chronic debt, and working harder just to feel like they’re standing still.
And history has a way of reminding us what happens when the middle class starts to fade - from Rome in 150 B.C. to pre-Revolution France in the 1780s to China in the 1950s and Russia before 1917 - extreme inequality can breed significant volatility.
The middle class didn’t vanish. It’s just getting priced out.
And if the center can’t hold, that’s a problem.
Anyway, who knows how this will all play out?
This is just some food for thought as we watch how these trends develop.
We’ll be keeping a close eye on things. Enjoy the rest of your weekend.
Sources:
- Advance Real Retail and Food Services Sales (RRSFS) | FRED | St. Louis Fed
- Your Turkey Is Cheaper This Thanksgiving. That’s About It. - Bloomberg
- The American Middle Class Is Shrinking, and That’s OK - Bloomberg
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