That was also true. They were some of the only people that saw wage inflation *during* the pandemic. But I think that’s mostly filtered through the economy along with the other “stimulus”, and the excess savings has also now been diminished. I’ve seen varying reports as to how much “excess savings” the average American still has, but the general idea is that it’s shrinking.
Many people in the construction and service industries saw their wages increase as well. Agree data shows the “excess savings” is shrinking, allegedly the Fed wants it smaller. For the record when I’m talking about stimulus I’m referring to all forms of fiscal stimulus not just the monies sent out as payments to individuals. I heard recently that much of the build back better plan with respect to infrastructure has not even started to be spent yet. Perhaps that delay will help if the economy really contracts like quite a few are predicting.
Hilarious. It plummeted when the pandemic hit and bounced back to the trend line - that’s not crazy. And that’s one month. You’re out of room.
Although I do have sympathy for the person who was the focus of the first paragraph of the article, a 21-year old who lost his 10-year old used car through repossession overall I am not very empathetic since it looks to me like a lot of American consumers are purchasing cars that they really cannot afford.
Cars and rents have got to be especially brutal for that age group, esp if they don’t have parents that can help them out with their first car. With the chip shortages and used car demand going through the roof, I bet that made re-possessors all that more aggressive. To make matters worse a used car previously valued at $10k would probably be more like $15k to re-aquire something similar, but for a person with credit issues that is likely a moot point. People buying cars they can’t afford is nothing new, maybe it’s gotten more extreme.
Sure because when a global pandemic hits and many jobs and industries are closed we expect large groups of people to start buying expensive things like houses, that’s a normal thing to do when my job closes for an unknown period of time. Look how long it took housing starts to get back to trend line with the last big pullback….
Prospects for the global economy are improving, as worst fears fade https://www.washingtonpost.com/business/2023/01/30/imf-global-economy-improving/
Form the Wall Street Journal The U.S. Consumer Is Starting to Freak Out It’s a stark turnaround from the second half of 2020, when Americans lifted the economy out of a pandemic downturn, helping the U.S. avoid what many economists worried would be a prolonged slump. Consumers snapped up exercise bikes, televisions and laptop computers for schoolchildren during lockdowns. When restrictions were lifted, they rushed back to their favorite restaurants and travel destinations. And they kept spending, helped by government stimulus, flush savings accounts and cheap credit, even as inflation picked up. Faced with four-decade-high inflation last year, Americans outspent it. Through most of 2022, consumer spending growth exceeded price increases by about 2 percentage points. Now the forces that helped keep spending high are unwinding, while inflation remains elevated. The share of monthly income Americans set aside for savings was 3.4% in December, down from 7.5% a year earlier and from a record high in April 2020. Credit-card interest rates have been rising, and Federal Reserve officials have signaled that they plan an additional quarter-percentage point increase to the central bank’s benchmark rate this week. That would bring the rate to between 4.5% and 4.75%, from near zero at the start of last year.” The U.S. Consumer Is Starting to Freak Out — The Wall Street Journal Here we go..
People had good savings from the last few years, they are expected to burn through that by around spring/summer on average. We will see what happens then. But so far, we still have high inflation (though it has stopped rising and even fallen a small amount), and now layoffs are coming, on top of the cost stresses on a lot of families. So I still don’t think we avoid a moderate downturn, just might take longer than experts expected.
Hard to say what will happened. We are at the end of the global pandemic, and it's truly unprecedented times. The layoffs are occurring, which is generally the last sign of a recession. At the same time, job openings are still at 11 million, which suggests the possibility of a soft landing if the recently laid off can land on their feet and find a new job quickly. Inflation does seem to be slowing down, and I think the Fed's thought of raising .25 is to ensure inflation doesn't pick up again. More cautionary than reactionary, maybe? In my opinion, unnecessary, but I understand where the Fed is coming from.
I don't know how accurate this is, but the fed's "nowcast" shows elevated monthly inflation expected for Jan. and Feb. of ~0.6, so maybe that played a part. Otherwise, it's been 7 or so months since we've had an elevated monthly inflation read. Inflation Nowcasting Edit: FWIW, the "Nowcast" projected 0.4 for Nov. and 0.5 for Dec., but the actual reads were 0.1 and -0.1.... so it doesn't seem to be very reliable. I guess we'll have to wait and see...