How Long US Consumers Have Before The Bottom Falls Out
Nov 21, 2022 19:35:42 GMT -5
Post by shalom on Nov 21, 2022 19:35:42 GMT -5
9-12 More Months: How Long US Consumers Have Before The Bottom Falls Out
BY TYLER DURDEN
MONDAY, NOV 21, 2022 - 06:40 PM
During the Covid-19 pandemic, consumers socked away an unprecedented amount of cash thanks to government stimulus and a locked down economy. There was such a surplus that people were able to also pay down debt, buy new appliances, and take vacations once draconian lockdowns were lifted. And of course, businesses raised prices and hired more workers to meet the flood of demand.
Now that we're 'enjoying' inflation while wages have struggled to keep up, the question becomes - how long can consumers maintain this level of spending with their "excess" savings, which was estimated at $1.2 - $1.8 trillion heading into Q3 of this year?
Around nine to twelve months, according to the Wall Street Journal.
What's more, consumers have already been loading up credit cards to supplement their incomes.
A brief history of recent savings trends via the Journal;
In 2019, before the pandemic hit, households saved 8.8% of their disposable income. That saving rate jumped to 16.8% in 2020, the highest annual saving rate on record, as government stimulus and unemployment benefits left many consumers flush with cash but with few opportunities to spend during lockdowns.
In 2021 the saving rate moderated to 11.8%, and it has fallen further during 2022. The rate has been below 4% for seven straight months and in September it stood at 3.1%, near its lowest level since the 2008 financial crisis.
In short; consumers are spending more and saving less of their monthly income thanks to inflation.
Continued at link
BY TYLER DURDEN
MONDAY, NOV 21, 2022 - 06:40 PM
During the Covid-19 pandemic, consumers socked away an unprecedented amount of cash thanks to government stimulus and a locked down economy. There was such a surplus that people were able to also pay down debt, buy new appliances, and take vacations once draconian lockdowns were lifted. And of course, businesses raised prices and hired more workers to meet the flood of demand.
Now that we're 'enjoying' inflation while wages have struggled to keep up, the question becomes - how long can consumers maintain this level of spending with their "excess" savings, which was estimated at $1.2 - $1.8 trillion heading into Q3 of this year?
Around nine to twelve months, according to the Wall Street Journal.
What's more, consumers have already been loading up credit cards to supplement their incomes.
A brief history of recent savings trends via the Journal;
In 2019, before the pandemic hit, households saved 8.8% of their disposable income. That saving rate jumped to 16.8% in 2020, the highest annual saving rate on record, as government stimulus and unemployment benefits left many consumers flush with cash but with few opportunities to spend during lockdowns.
In 2021 the saving rate moderated to 11.8%, and it has fallen further during 2022. The rate has been below 4% for seven straight months and in September it stood at 3.1%, near its lowest level since the 2008 financial crisis.
In short; consumers are spending more and saving less of their monthly income thanks to inflation.
Continued at link