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Morning Notes — Consumer


May 24, 2022

The consumer came into this year with strong household balance sheets and elevated savings rates. Recessions generally require stretched credit conditions and deteriorating labor markets accompanied by mass layoffs.  Consumers have been faced with a purchasing power squeeze over the last 9 months, but US and European consumer savings rates have only pulled back to their long term averages, and labor market data continues to be strong with steady wage growth.  The current economic debate is focused on growth or recession, but a more nuanced slowdown or pause seems far more likely. A Fed policy mistake is the primary concern for the economy, but over the past week there’s been a notable dovish pivot from several monetary officials including Atlanta Fed President Bostic who said “it may make sense to pause in September depending on the economy.”  

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