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Originally Posted by The Elkster
The retail side and pricing is going to be an interesting thing to watch in the coming days. I'm not an expert in retail economics but I'm still torn on whether we will see price drops to clear inventory or see retailers stick to their guns and accept less customers at these higher prices. Neither is a particularly great prospect from a market perspective, but I think it will tell the tale of how much pricing has been driven by real cost increases vs retail pricing things opportunistically based on the fact that everyone has accepted inflation as inevitable. If the later issue is the dominant case, then I expect to see more price drops but if base costs are the big factor driving, prices will likely be very sticky. Nobody wants to realize a loss. Either way its not looking great for the economy and I'm still surprised at how upbeat the market is taking all this.
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Good post.
Was reading an interesting article on US household cash reserves. They have basically dropped 80% in the last 9 months. I think there will be a crunch soon and the retailers are going to be at the front end of this pain.