### Summary
📉 Americans could run out of savings as early as this quarter, according to a Fed study. Excess savings are likely to be depleted during the third quarter of 2023.
### Facts
- 💸 As of June, US households held less than $190 billion of aggregate excess savings.
- 💰 Excess savings refer to the difference between actual savings and the pre-recession trend.
- 🔎 San Francisco Fed researchers Hamza Abdelrahman and Luiz Oliveira estimate that these excess savings will be exhausted by the end of the third quarter of 2023.
- 💳 Americans are using their credit cards more, accumulating nearly $1 trillion of debt.
- 📉 The downbeat forecast raises concerns about the US economy as consumer spending is crucial for growth.
Recent profit reports from companies such as Amazon, Walmart, and Home Depot, along with other consumer statistics, indicate that the case for a 2023 recession is weakening, as the consumer economy shows resilience with rising real incomes, substantial savings, and continued spending in sectors like automobiles and services.
Despite concerns over the financial health of the US consumer, projections for a stock market decline may be unfounded as consumers have the capacity to spend, with low debt levels, significant assets, untapped home equity, low mortgage rates, and solid retail spending.
The first nine months of 2023 have shown resilience in the market, with the Fed's tightening cycle dragging it higher, and there are concerns about wages, geopolitics, and weather impacting the economy.
German consumer confidence is expected to decrease in September due to persistently high inflation rates and a lack of clear upward or downward trend in the consumption climate.
Consumer confidence in the US fell in August due to concerns about inflation, reversing the optimism from the past two months, according to The Conference Board's Consumer Confidence Index.
The number of job openings in the US fell to 8.8 million at the end of July, indicating a slowing economy, with declines seen in professional and business services, healthcare, and state and local government sectors, while the information industry and transportation saw increases in job openings. Additionally, consumer confidence dipped in August as Americans grew more concerned about rising prices of gas and groceries, and home prices continued to increase in June.
The number of job vacancies in the US dropped in July, indicating a cooling labor market that could alleviate inflation, while fewer Americans quit their jobs and consumer confidence in the economy decreased, potentially impacting consumer spending; these trends may lead the Federal Reserve to delay a rate hike in September.
Consumer confidence in the United States has plummeted as high prices and interest rates deter spending, with the Conference Board's consumer confidence index falling to 106.1 in August from a revised 114 in July.
US consumer confidence dropped to 106.1 in August from 114 in the previous month, reversing gains made in June and July, with economists blaming higher gasoline prices as a key factor behind the decline.
The U.S. economy is defying expectations with continued growth, falling inflation, and a strong stock market; however, there is uncertainty about the near-term outlook and it depends on the economy's future course and the actions of the Federal Reserve.
Consumer confidence is dropping despite a strong economy, leading to questions about the factors influencing sentiment.
Top economist David Rosenberg predicts that the US will experience a recession within the next six months due to the aggressive interest rate hikes by the Federal Reserve and the erosion of credit quality in credit card debt.
Wall Street is optimistic about the September trading month, but there are concerns about falling consumer confidence data and a potential recession next year, according to Commonwealth Financial Network Chief Investment Officer Brad McMillan.
Goldman Sachs chief economist Jan Hatzius predicts that US consumers will remain resilient in 2024, with a projected growth of around 3% in real disposable household income, indicating that a decline in real consumer spending is unlikely despite signs of stress.
The US economy is predicted to enter a recession by spring, leading to a 25% or more crash in the S&P 500, according to economist David Rosenberg, who warns that American consumers are nearing their spending limits and rising home prices reflect a weak housing market.
Canadian consumer and business confidence has plummeted to its lowest levels since the pandemic, leading to a disconnect between the state of the economy and the public's negative sentiment, which could be attributed to anxiety-inducing inflation and concerns about rising interest rates as well as worsening structural problems such as unaffordable home prices and stagnant GDP per capita.
The US consumer is predicted to experience a decline in personal consumption in early 2024, which could lead to a potential recession and downside for stocks, as high borrowing costs and dwindling Covid-era savings impact household budgets.
The US economy is facing a looming recession, with weakness in certain sectors, but investors should not expect a significant number of interest-rate cuts next year, according to Liz Ann Sonders, the chief investment strategist at Charles Schwab. She points out that leading indicators have severely deteriorated, indicating trouble ahead, and predicts a full-blown recession as the most likely outcome. Despite this, the stock market has been defying rate increases and performing well.
US household income fell by the most in over a decade in 2022, showing the impact of rising costs and the expiration of pandemic relief programs, with the median income dropping 2.3% and marking the third consecutive annual decline, contributing to concerns about the financial well-being of American families.
Consumer sentiment in the US fell for the second month in a row in September, reflecting concerns about the economy, even though Americans believe that inflation will continue to slow.
Builder confidence in the US housing market unexpectedly dropped for the second consecutive month in September, as high mortgage rates dampened consumer demand for new homes.
U.S. homebuilder confidence fell to its lowest level since April in September due to high interest rates, leading to decreased affordability for buyers and a decline in demand for new home construction.
The forecasted U.S. recession in 2024 is expected to be shorter and less severe than previous recessions, with the economy's interest-rate sensitivity much lower due to reduced leverage and elevated savings from the postpandemic environment, leading investors to consider positioning for investment opportunities that will drive markets into 2024.
The consumer confidence of American consumers decreased in September, particularly in regards to future expectations, amid concerns of elevated interest rates and a potential recession within a year.
Pending home sales in the U.S. fell more than expected in August, dropping by the largest margin in nearly a year, as high mortgage rates diminished affordability for buyers.
Investors and experts differ on the timing, but many believe a recession is inevitable in the near future due to falling consumer confidence and a slowing economy, prompting discussions about the Federal Reserve's interest rate moves.
Despite a strong job market, workers' confidence has dropped to its lowest level since 2016, attributed to financial stress and the comparison to the scorching-hot job market in 2021 and 2022.
The chances of the U.S. economy avoiding a recession are improving, with recession odds dropping to 46 percent, the lowest since the first quarter of 2022, according to economists surveyed by Bankrate. However, risks of a recession remain, with more than 2 in 5 economists suggesting that the chances are still greater than 50 percent.
The Consumer Price Index (CPI) report for September 2023 is expected to show a slow increase in prices, with market expectations forecasting a 0.3% increase in core inflation on a monthly basis and 4.1% on a yearly basis, which may lead to stronger market reactions if the figures exceed expectations. Banks such as Morgan Stanley, Goldman Sachs, and Bank of America have provided their predictions for the upcoming CPI report. Analysts suggest that if the core CPI exceeds 0.1% on a monthly basis, it could lead to a decline in the stock market as it may indicate a potential interest rate hike by the Federal Reserve. This data is particularly significant as it precedes the FOMC meeting scheduled for October 31-November 1.
Consumer sentiment in the US fell to its lowest level since May, with Americans' expectations for inflation over the next year reaching the highest level since April, potentially leading to higher price pressure.
Economists are predicting that the U.S. economy is less likely to experience a recession in the next year, with the likelihood dropping below 50% for the first time since last year, thanks to factors such as falling inflation, the Federal Reserve halting interest rate hikes, and a strong labor market.
Confidence among builders in the U.S. housing market has fallen for the third consecutive month due to higher mortgage rates, leading to decreased demand for new homes. The National Association of Home Builders/Wells Fargo Housing Market Index dropped to 40, the lowest reading since January 2023, reflecting concerns about buyer traffic and housing affordability.
The strong performance of the US consumer, with retail sales rising 0.7% in September, could lead to more Federal Reserve rate hikes and upside risks to inflation entering the fourth quarter of 2023.
The U.S. economy is facing risks in 2024 as inflation remains high and interest rates are historically high, leading to concerns about a potential recession; however, the Federal Reserve is optimistic about achieving a soft landing and maintaining economic growth. Economists are divided on whether the Fed's measures will be effective in avoiding a severe recession, and investors are advised to proceed cautiously in their financial decisions.
The US economy is expected to experience significant growth in the third quarter, despite a 0.7% decline in the leading economic index in September, with forecasts suggesting a GDP expansion of over 4%; however, analysts warn that the late stages of a business cycle may not provide clear indications of an imminent downturn.
The U.S. economy has defied expectations by experiencing faster growth, with a projected GDP increase of 4% to 5% in the third quarter, but concerns remain about a potential recession in the near future due to factors such as limited income growth, cautious business behavior, and economic restraints.
The US economy experienced strong growth in the third quarter of 2023, fueled by consumer spending, but there are warning signs of a possible recession due to the impact of rate hikes on auto loans, credit cards, and student debt, as well as higher borrowing costs and the potential for deeper recession if the Federal Reserve continues to raise interest rates.
