Spending softening as savings exhausted
In our latest?article?we discuss how retail sales are beginning to decline as household savings built up during the pandemic are depleted.
The US savings rate is now merely 2.4%, less than half its typical level. The sharp rise in consumer loans including credit card usage indicates many consumers are spending beyond their incomes.
Strong jobs markets encourage central banks to raise rates further and hold them there for longer. Yet weakness will come. US unemployment of merely 3.4% could well be a percentage point higher in a year or so, implying many thousands of job losses per month.
Abundant volatility and uncertainty instruct a cautious and flexible investment approach.
Many investors will be disappointed by the looming downward pressure on earnings exacerbated by inflation and interest rates stubbornly higher than many are hoping.
I hope you find the article interesting and helpful in furthering your investment goals.??
Please let me know if you would like to discuss.?
A version of this?article first appeared in?SMSF Adviser Magazine.
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This article?is provided for general information purposes only and should not be construed as personal financial advice.
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