Macroeconomic Update (Income, expense, consumer credit)

Real income is experiencing a steeper rate of change than real disposable income. This coupled with increased productivity and a declining quit rate is disinflationary, but frustrating for workers. This tends to translate to pessimistic economic outlook.



Spending is slightly up to relatively flat while implied savings is decreasing. Don’t be surprised if we see media call this out as alarming. However, this is something that we see in the middle of economic cycles, not at the end.

Sharply increasing savings and sharply decreasing spending are traits of downturns, while depleting savings and continued spending favors market continuation.




Credit card delinquencies get a lot of press. However, credit card delinquencies pulling away from delinquencies in secure loans is also something that we see in the middle of an economic cycle.



Additionally, the relationship between the rate of change for real income, consumer credit, and card delinquencies is similar to the middle of a cycle. After downturns incomes begin to recover, and the consumer borrowing closely follows. The rates of change for each increase and then normalize. Consumers begin to realize a flattening rate of change for income, and then we see credit card delinquencies increase and level off.