State of the Consumer – Part 2

Mar 25, 2024 | Macro Insights, No Bull Economics

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In our previous State of the Consumer Part 1 analysis, we suggested that consumers may have become more conservative in their secular spending patterns post-covid. In this analysis we provide another view of the consumer, illustrating another spending headwind & now we are questioning whether lower interest payments will translate into spending increases as commonly expected…  


  • If consumers are conservatively working to reign in their post-covid spending as discussed here, we would expect their savings rate to increase as we saw immediately after the initial covid scare.
  • However, the Fed’s sharp rate hike appears to have deterred savings as highlighted in the chart below. The question is whether an eventual decrease in rates (and associated interest payments) will translate into higher consumer spending or a rebound in consumer savings?
  • If we are right, and covid turns out to be as influential on the consumer as the Great Depression (our hypothesis), and consumerism turns into a prolonged conservative consumer spending approach, then lower interest rates may translate into a higher savings rate rather than the spending increase that many anticipate.   

Personal Saving Rate & Personal Interest Payments Graph

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