Consumers Finding a Mixed Bag of Economic Data

Last Edited by: LPL Research

Last Updated: November 30, 2023

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Jeffrey Roach (00:02):

Let's talk about the mixed bag consumers are finding in this current environment, and I'll share three hot charts I'm tracking right now. First, upper-income households are under pressure. Given the current phase of the business cycle, it's helpful to monitor soft survey data, in addition to the hard data. For the last few years, we've seen a rising percentage of upper-income households reporting an inability to make minimum debt payments. This is worth tracking and helpful for those watching the consumer discretionary sector. Second, the U.S. has less stress than European counterparts. According to real time market data, we see higher risk in the Eurozone in the U.K. This divergence has been around for a while and is one of the reasons to have a domestic bias right now. Third, a slower growth trajectory. We'll push the Fed to a pause. Investors got a revised look at Q3 and growth was hotter than originally thought, and you can see that in the chart. The U.S. economy grew over 5% in Q3, but the trajectory has softened, and this is likely good news for markets as the Fed becomes more public about their intentions next year. A softer economy with cooling inflation pressures is just what the doctor ordered for markets. Now looking ahead, we should expect inventories and business spending subtract from Q4 GDP growth. If you want more insights on global market trends, follow us on social media, and take care.

LPL’s Chief Economist Dr. Jeffrey Roach discusses global stress indicators that bode well for domestic risk assets as well as some leading indicators of consumer spending.

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