The US economy might be heading into a consumer-led slowdown, according to Macquarie strategist Thierry Wizman. He predicts that this downturn could happen between now and the end of the first quarter in 2024. American consumers appear to be slowing down, showing signs of a spending recession as they deplete their savings. Wizman pointed out a few warning signs indicating that the economy is on the verge of tipping into a slump.
Wizman’s forecast is in contrast to what others have said, as retail sales have skyrocketed over the last quarter. However, he believes the resilient spending could be problematic, leading to a major pullback in consumer spending that could potentially push the overall economy into a recession.
There are five signals pointing to an upcoming spending recession. First, credit card delinquencies are on the rise, with newly delinquent credit card users doubling in the last quarter. Second, Americans are saving less, with the personal savings rate falling to 3.4% in September. Third, consumer confidence has decreased for three consecutive months, indicating growing concerns about the economy. Fourth, consumers are less likely to splurge during the holiday season compared to the previous year. Lastly, holiday hiring among retailers has decreased to the lowest level in five years.
The economy is at a critical juncture as these warning signs suggest that the US consumer’s spending spree is coming to an end. The potential downturn is causing increased financial stress among consumers and might force a significant pullback in consumer spending, which could lead to an economic recession.
