September 16, 2024
We could be in the weirdest recession in U.S. history. In truth, I think we’re already in a recession, and it’s not like those we’ve experienced in the past. While it could prove to be mild overall, it’s hitting the least wealthy Americans hardest.
It’s a recession of the “have nots,” and it’s already causing trouble.
According to a Guardian/Harris poll, 56% of Americans think we’re in a recession. They also think stocks are down and unemployment is high.
Many media pundits said these folks are simply misinformed. But if most people feel this way, it could be a sign that something isn’t right – even if official data doesn’t reflect it yet.
There have been more signs of trouble too.
For instance, fast food companies are in an all-out pricing war, shrinking profit margins to keep customers. Also, earnings at major retailers like Starbucks, Dollar General, and Walmart show how lower-income consumers are cutting back and just sticking with the essentials.
On top of that, the employment market continues to weaken. Recent data revisions show there were 818,000 fewer jobs created than originally reported.
All in all, people aren’t working like they were a year ago and they aren’t spending like they were a year ago. This is why companies are pulling out all the stops to retain business.
It doesn’t take two quarters of negative economic growth next year to reveal what’s pretty obvious – consumer behavior is changing. That’s what really matters. The consumer is stretched.
Consider that credit card delinquencies and balances are high and keep rising. Plus, the personal savings rate is at its lowest point since November 2022:
Investors may want to be wary of buying highly discretionary or luxury stocks. The “have nots” are hurting.