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Strategies & Market Trends : The Residential Real Estate Post-Crash Index-Moderated
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From: S. maltophilia6/8/2022 3:47:58 PM
   of 119360
 
....There’s a vociferous debate around the viability of the “excess savings” narrative, which says Americans’ pandemic “buffers” will suffice to support consumption at least for another few quarters. The question is: In whose hands does that “extra” money reside?If the majority of it is concentrated in the bank accounts and money market funds of the rich, it doesn’t much matter. They have the lowest marginal propensity to consume, and high credit scores. If they want to go shopping — for clothes, a home or anything in-between — they’re going to do it anyway, unless there’s a deep recession. The economy needs regular people to keep spending.

If regular people are more inclined to fund consumption with debt, it’s worth noting that Americans now have some $3.3 trillion in headroom on their credit cards. That’s a record (figure below).



Again, there are two ways to look at the situation. One way is to suggest that between still swollen savings and money market fund balances (whoever owns them) and trillions in available revolving credit, spendthrift Americans can keep spending.

A less generous interpretation would be to call this a recipe for disaster. Revolving credit is rising sharply alongside surging prices, there’s scope for variable rate debt to go considerably higher and the Fed is aggressively raising rates.

Total household debt is now $1.7 trillion above pre-pandemic levels. Credit card balances remain below the highs hit in the fourth quarter of 2019.

You can draw your own conclusions......

heisenbergreport.com
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