We have written about the slowdown in consumer related economic data multiple times, (May 25, 2022; June 15, 2022; April 6, 2022) driven by a deceleration in real earnings (combination of higher consumer prices and the expiration of fiscal support), leading to a decline in savings rates and an acceleration in consumer credit to try...Read More

The most recent U.S. real GDP release has created a debate over whether or not the U.S. economy is in a recession and the implications this has on future outcomes.  There have been similar periods that were considered shallow or technical recessions that still experienced sizeable negative outcomes for corporate profits which contributed to weaker...Read More

Over the last few months, we have been writing about a rising probability that economic growth will slow down on a rate of change basis. The most recent round of housing data releases provided more evidence towards that scenario. The National Association of Home Builder’s Housing Market Index, a leading sentiment indicator for the single-family...Read More

Elevated inflation, particularly in food and energy, is taking up a greater portion of consumers’ disposable income which can lead to a slowdown in overall demand and negatively impact corporate profitability. The Consumer Price Index (CPI) accelerated 9.00% year-over-year in June. This increase was driven primarily by higher food and energy prices. Food prices moved...Read More

U.S. Dollar exchange rates have implications for the trajectory of global economic activity. The majority of global businesses rely on access to U.S. Dollars in order to remain operational. A rising dollar increases the day-to-day costs of doing business internationally. Historically, the result is a less favorable economic environment for real growth. The DXY Index...Read More

The probability of an economic slowdown is rising, which leads to lower interest rates and a deceleration in inflation. Interest rates and inflation breakevens have been declining since the recent rate hikes. The inversion in the Eurodollar futures curve has deepened over the last few weeks. Commodities have started to decelerate from their prior peaks...Read More

Throughout the year, we have been noting that consumer incomes were likely going to slow as a result of the fiscal support from 2021 not being repeated in 2022, and more recently, price increases in areas like gasoline and food reducing purchasing power for discretionary items.  Last week, the retail team at research firm Hedgeye...Read More

The Consumer Price Index (CPI) made a new cycle high in May, increasing at 8.6%.  Shelter is the largest overall category in the CPI (32%) and Owners’ Equivalent Rent (OER) is the largest component of the shelter category (24%).  OER is an attempt to capture homeowners’ housing consumption by calculating what they think they could...Read More

Consumer spending has been equal to 65-70% of U.S. GDP since the mid-1990s. Source: Macrobond. This means that the health of the consumer, and their ability to continue spending, has a large impact on the growth of the overall economy.  Many consumer related indicators are heading in a negative direction. Consumer incomes on a real...Read More

Labor market data is often one of the last economic indicators to decline as companies often wait to determine if the environment requires that they reduce their costs.  This often involves reducing the number of people they employ.  There are early indicators of this forming, as well as a few other indicators, that we can...Read More