The Consumer is Cracking - The Recession Never Ended

About this video

• Video Title: The Consumer is Cracking - The Recession Never Ended
• Channel: Infranomics
• Speakers: Not specified in the transcript
• Duration: 18:33

Overview

This video analyzes the current state of the average consumer, arguing that a recession has been ongoing. It examines various economic indicators, including consumer sentiment data, wage trends, personal savings, interest payments, consumer credit, unemployment rates across different demographics, real GDP growth, personal consumption expenditure, money market fund balances, homeowner equity, and the real purchasing power of wages. The presenter highlights concerning trends and historical parallels that suggest potential economic instability.

Key takeaways

• Divergent Inflation Expectations: Consumer expectations for inflation significantly differ from actual CPI data, a divergence historically seen only during deflationary periods or 2020, suggesting a disconnect in how consumers perceive inflation.
• Rising Unemployment Concerns: While headline unemployment (U3) is low, broader measures (U6) are higher, and specific demographics like Black and youth populations show significantly increasing unemployment rates, indicating underlying labor market stress.
• Decreasing Real Wage Purchasing Power: Despite nominal wage increases, when adjusted for inflation and compared to the money supply (M2), the real purchasing power of wages has significantly declined, hitting an all-time low when measured in gold terms.
• Strained Personal Savings and High Interest Burden: Personal savings, when adjusted for money supply growth, show diminished real purchasing power. The hours of work required to pay annual interest obligations have reached historical highs, mirroring pre-recessionary periods.
• Consumer Credit and Home Equity Utilization: Consumers are increasingly relying on credit cards and tapping into home equity to manage finances, evidenced by rising credit card debt and an uptick in home equity loans, signaling potential financial strain.