The US consumer isn't in trouble. Here are 5 stats that show Americans will be fine even amid dwindling savings and student loan payments.
That's the big takeaway from Carson Group's chief market strategist Ryan Detrick, who highlighted just how strong the consumer really is based on various economic datasets in the firm's 2023 mid-year outlook report.
The consumer is important to track for because about 70% of the US economy is driven by consumer spending, which relies heavily on the daily spending habits of more than 300 million Americans.These are the five key charts that show just how strong the consumer is, and why that strength should continue to shield the US economy from an imminent recession."When thinking about debt, the key question is whether households are able to service that debt," Detrick.
Enter the household debt service ratio, which measures the percentage of consumers' income that is being used to pay off all types of debts, from mortgages to credit card bills to student loans., the household debt service ratio at the end of the second quarter was 9.7%. That figure is well below the 13.2% reading seen in the fourth-quarter of 2007, and it's also below the pre-pandemic average of 11.2%.
"Disposable income has grown at an annualized pace of 10% over the first five months of this year. Meanwhile, inflation is running just about 4%, meaning households are seeing real income gains," Detrick said.Consumers have $168.5 trillion in total assets compared to just $19.6 trillion in debt. That's a healthy balance sheet and doesn't suggest a period of weakness ahead.
"The employment-population ratio for prime-age workers , which accounts for labor force participation issues and an aging population, is now at 80.7%. That is higher than at any point between 2002 and 2022. This is truly remarkable, and points to a labor market that is the strongest we've seen since the late 1990s," Detrick said. "Consumption continues to run along the pre-pandemic trend, even after adjusting for inflation...
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