Six questions concerning the weakness behind US resiliency
Six questions concerning the weakness behind US resiliency
Friday 15 March 2024
Cross Asset
Six questions concerning the weakness behind US resiliency
March 2024 | In January we had some upside surprises, encompassing import prices, producer prices, both the headline and core Consumer Price Index, and the Personal Consumption Expenditure deflator. We think prices were in part boosted by seasonal factors which are not fully accounted for in the usual seasonal adjustment. The weakness in January retail sales and a downward revision of November and December readings signal, in our opinion, a potential downshift in consumer spending. Credit card and auto loan delinquency rates continue to rise according to the New York Fed report; consumption so far has been supported by the depletion of excess savings but US households have also taken on more debt, and some of those loans are becoming delinquent, especially credit card and auto loans, which are now above pre-COVID levels.
01 | The US economy is showing signs of deceleration, with falling profit margins and a decline in the leading economic index suggesting a potential slowdown in the coming quarters.
02 | Rising delinquency rates on credit card and auto loans signal increased financial stress, especially among younger and lower-income households.
03 | Restrictive monetary policy and high mortgage rates are contributing to low housing market activity and this trend should also continue in 2024.
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