The news is full of negative stories about U.S. consumers…
The mainstream media loves to talk about the bad stuff. It focuses on topics like surging debt levels, struggling low-wage workers, and poor financial decisions.
Now, a lot of people out there are dealing with serious problems in their lives. I don’t mean to minimize that.
But the thing is, the data tells a different story about the U.S. economy as a whole…
The economy isn’t as bad as the media makes it seem. In reality, the American consumer is thriving.
Today, we’ll look at two key figures that help us “cut through the noise.” And you’ll find that America’s economic engine is better off than the media would lead you to believe…
The U.S. consumer is America’s economic engine. We’re the folks who make the economy tick.
If most people are doing well, the economy booms. But if a lot of people are struggling, the economy grinds to a halt.
At any time, we can use two key statistics to figure out how the U.S. consumer is doing. The first is the credit-card delinquency rate. And the other is the personal savings rate.
Let’s start with credit-card delinquencies. The Federal Reserve tracks this data. And the following chart goes back more than three decades. Take a look…
Now, this chart might surprise you…
After all, the mainstream media makes it seem like everyone is drowning in credit-card debt. My colleague Briton Hill talked about that in the June 6 edition of Chaikin PowerFeed.
But the actual government data tells the full story…
Credit-card delinquencies are near record lows. In fact, the only time they’ve been significantly lower was in 2021. That’s when Uncle Sam showered working-class Americans with cash.
This stat is important. It’s a real-money measure. It doesn’t focus on how people feel. Rather, it tells us what they’re actually doing with their money.
When times are really tough, people default on credit cards. A missed credit-card payment could mean keeping the power on or buying another week’s worth of groceries.
That’s not the case today, though. Incredibly low delinquency rates show us that the average U.S. consumer isn’t struggling with these tough decisions right now.
Now, if we think one step ahead, the next question is, “What about savings rates?” Perhaps many Americans are paying their credit-card bills but not saving any money.
Fortunately, the government tracks that data as well. Take a look…
This chart comes from the U.S. Bureau of Economic Analysis. It shows “personal saving as a percentage of disposable personal income.” That’s often shortened to the “personal saving rate.”
Sure, the current personal saving rate looks low next to the crazy mountain of pandemic-era stimulus. But when we look closer, we can make a strong conclusion…
The current personal savings rate for U.S. consumers is in line with its historical average. People saved the same percentage of their income in 2006 that they’re saving today.
Now, would I like it if U.S. consumers saved and invested more of their disposable income? Of course.
I started Chaikin Analytics with the express purpose of helping hard-working Americans – like my wife, Sandy – navigate their own investments. That includes retirement investing.
But aside from that, the data is clear. Sure, the news stories we hear about American consumers sound dire. But right now, things look pretty good by these two measures.
As long as the U.S. consumer keeps buying, American businesses (and their stocks) will continue to prosper. This is yet another angle in support of a “bullish” market thesis…
Put simply, America’s economic engine is still going strong today.
Good investing,
Marc Chaikin
