- « Day 80 For S&P 500 and The 50 Day Exponential Moving Average
- Treasury Market Practices Group Addresses Failure To Deliver »
Bet Against The American Consumer
One of the more interesting outcomes of the negative economic and financial feedback loop is the time honored investment axiom of never betting against the American consumer has been discredited. In fact betting against the American consumer has been a relative attractive position as households and individuals join other entities in readjusting their credit exposure lower, contributing to a precipitous drop in final sales and services.
The rate of growth in Household Credit Market Debt Outstanding is at the series lowest level in the recorded period. This is representative of a significant shift lower in demand for debt linked to households and individuals. I read it as a distaste by Wall Street for risk tied to consumers.
The relationship between slowing household credit growth and declining consumer demand is most notable in the charted time series comparing the year over year change in Retail and Food Service Sales and Household Credit Market Debt Outstanding.
Unsurprisingly, today’s sales figures, the lowest in six years according to a Bloomberg report, paints a bleak picture for retailers across the country.
Image Source: Wall Street Journal
