The Consumer Strikes Back AGAIN!

Despite recent volatility in the stock market, the US consumer remains resilient against all odds.

In the United States, consumption accounts for a significant portion of GDP. According to the Bureau of Economic Analysis (BEA), personal consumption expenditures (PCE) accounted for approximately 68% of US GDP in 2021. This means that consumer spending on goods and services was the largest contributor to the country’s economic output.

The United States consumer is generally considered resilient due to several factors:

1. Diversified Economy: The US has a diverse economy that is not dependent on any one industry or sector. This means that if one industry or sector experiences a downturn, consumers have other options available to them to maintain their standard of living.
2. High Disposable Income: The average American has a higher disposable income than people in many other countries, which means they have more money to spend on goods and services, even during times of economic hardship.
3. Strong Social Safety Net: The US has a relatively strong social safety net, which helps to protect consumers during times of economic hardship. Programs like unemployment insurance, food assistance, and healthcare subsidies can help individuals and families maintain their quality of life even during tough times.
4. Resilient Consumer Culture: Americans are known for their consumption culture, and many are willing to spend money even during times of uncertainty. This spending can help to prop up the economy and provide stability during difficult times.

Overall, the combination of a diversified economy, high disposable income, a strong social safety net, and a resilient consumer culture has made the US consumer relatively resilient over time.

I had a great buddy of mine ask if the US will go into recession in 2023. My answer: if the consumer remains resilient and unemployment remains low, good luck tipping the US economy into a recession!

The XRT which tracks retail companies has dipped significantly over the past five trading days due to the hotter than expected inflation reports coming in recently.

Take a look at personal consumption, its still ticking higher! Be on the look out this tax season for some refunds from swelled state budgets from unused federal Covid aid dollars to help residents cope with inflation.