Are Consumers Strong or Weak Right Now?

The case for and against

Welcome to two-sides Tuesday, where I argue against myself and everyone leaves more confused than when we started. Today I’m going to make the case that consumers are a source of strength for the economy right now. Then, I am going to refute that case. Let’s get started!

Consumers are Strong Right Now

Retail sales, even when adjusted for inflation, have been on an absolute tear lately:

Not only that, consumers have a higher net worth than ever before:

The proof is in the spending. After all, consumption makes up 70% of the U.S. economy. How can you argue with dollars spent?

Consumers are Weak Right Now

Despite the economic recovery from the pandemic, consumer sentiment is the lowest it has been since the Great Financial Crisis:

And, while people may be buying a lot of physical goods, consumption overall is at best on trend since the COVID shutdown:

Sure, supply chains are having issues but that is because people are buying tangible products and those don’t make up the more important aspect of consumption which is services. The overall numbers paint a less optimistic picture - consumers have barely recovered their spending and have yet to make up for the lost consumption during the COVID downturn. Sounds pretty weak to me!

Have a question you want to ask or a topic you’d like to see covered? Let me know!

Links

Most Popular Posts | All Historical Posts | Main Site | EM100 | EM1000