Consumers Have Cash and Confidence

The latest statistics on the consumer economy reveal a year filled with chilling headlines about inflation and recession.

Today, there must be many red faces in the confusion of economists and bean counters chattering that the continued effects of inflation all year round and the pandemic will inevitably plunge the U.S. economy into a ditch. The results won’t be known until next year, but this could be a December to remember how misguided they were.

Just last week, we learned from the Federal Reserve that consumers are sitting on a pile of disposable cash even as the personal savings rate in the US has dropped to a 17-year low. The Fed’s calculation of “withdrawable deposits” for households and nonprofits – a measure of cash on hand – hit an all-time high of $5.12 trillion at the end of the third quarter, a dramatic 20% increase from the end of 2021. showed. .

It seems that consumers have reduced their savings because they can. All this cash circulating helped consumers survive. total net worth broke the all-time record in the first quarter of this year.

At the end of the third quarter, just before the global Covid-19 shutdown, it was more than 25% higher than three years ago. The balance sheet of American households looks solid, with household liabilities increasing by nearly 20% over the same period.

With unemployment at a historic low, it’s no surprise that Americans are more confident about their job security, according to a biweekly Forbes Advisor-Ipsos poll. While reading is well below pre-pandemic levels, it is increasing with fewer people reporting that they know someone who was laid off.

Conference BoardA global economic think tank recently reported that “consumer confidence rebounded in December, reversing consecutive October and November declines, reaching its highest level since April 2022.” a similar trend It seems to be developing in the EU.

Inflation? There is good news there too.

The real-time inflation index from Truflation, an independent inflation data aggregator, found that the latest year-over-year rate fell just under 6% from 7.4% two months ago.

Finally, and most importantly, the US economy posted a healthy 3.2% growth in the third quarter, supported by strong exports and healthy consumer spending.

As someone in the business of understanding consumer attitudes and predicting economic outcomes, the constant drumming of impending doom may dominate the news, but consumers aren’t listening. They’re too busy shopping!

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