J.D. DURKIN: I want to talk specifically about retail sales. What did we learn and why is it important, Martin?

MARTIN BACCARDAX: Well, this is a solid number, I thought, for the month of August. Effectively, we saw 0.3% increase from July for total retail sales, somewhere around $683.3 billion spent, according to the Commerce Department. 

It's an important number because what we saw was retail sales rising despite gasoline sales tumbling quite quickly. Gasoline sales, stand alone, were down 4.2% Now that's on a value basis, not a volume basis. So it's not that we're buying less gas, it's just that, gratefully, we're paying less for it. 

And therefore, the assumption was retail sales at the headline level would fall as well, but they actually did nudge higher. But when you look at it on an annual basis, J.D., retail sales are up 9.1%, inflation is up 8.3%, so we're only modestly ahead of the headline inflation number. So we're not climbing in any great significance in terms of spending power, and the nominal number of gains that we're seeing are largely as a result of that broader inflation dynamic. 

So it's decent, it's not great, but it is suggestive that at the very least, the demand component of the inflation story is legitimate. What would be more worrying, J.D., is if we saw inflation surging and demand not following underneath, then we would know for sure it's a supply chain issue. That would be a lot more problematic for the Fed. At least seeing these numbers today, we know that the Fed understands this inflation dynamic, much better than it did the previous one, which was all about supply chains and energy markets. This is a bit more traditional and therefore more likely to be handled properly by the Fed as a result.