While the consumer continues to benefit from a high level of employment, healthy raises & some cost relief in the form of lower inflation & gas prices, significantly higher borrowing rates are driving an increase in credit card delinquencies & personal bankruptcies.
Commentary
- A +3% y/y increase in 3Q23 retail sales is consistent with a +3% y/y increase in personal consumption expenditures on goods. Notably, consumer spending on services continues to increase at 2X+ the rate of spending on goods.
- 3Q disposable personal income growth continued to increase at a healthy rate, close to 2X the rate of inflation.
- If not for the Fed interest rate hikes, consumers would be doing well. Unfortunately, for those consumers in debt, things are getting dicey as outlined in chart below. Hopefully, the Fed will relent & provide a rate cut to help low-income consumers struggling under the increasingly heavy burden of debt.
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