The consumer isn’t cracking yet
Interest is eating up about 2.5% of disposable income, up from 1.5% in 2021.
TL;DR
- American households are paying $604 billion annually in interest, representing 2.5% of disposable income.
- Consumer confidence has dropped to its lowest level since 2014, with expectations pointing towards a recession.
- Discretionary spending is under pressure, affecting sectors like retail, travel, and restaurants.
- Companies like McDonald's, Domino's Pizza, and Yum Brands are experiencing stock declines.
- Homebuilders and other sectors are also facing difficulties, with warnings of economic deterioration.
- A large majority of households are insulated by fixed-rate mortgages, mitigating the impact of rising rates.
- The data suggests consumers are more rate-sensitive and bifurcated, rather than indicating an imminent widespread crisis.