Morning Notes — Underlying Consumer Strength

The August Jobs Report capped off a series of mostly disappointing data including decent-sized downticks in August consumer confidence readings and a retail sales miss.  To us, the August pullback in consumer confidence was based on a growing sense this summer that the pandemic would have to be managed as an endemic rather than ending once herd immunity is reached.  The problem with betting against the US consumer is that underlying consumer fundamentals are so overtly strong.  The savings rate is still well above pre-pandemic levels, while measures like the debt service ratio and consumer cash on hand sit at records.  Headlines pointed to deceleration in August high frequency data, but overall card spending remained strong and mobility indicators were unchanged.  Importantly, every single public retail company, particularly apparel retailers, are citing underlying strength in consumer spending.  Delta variant concerns may have actually extended the consumer recovery with a global tourism wave now more likely to occur in the back half of next year.