10 Charts Showing the US Consumer Is in Excellent Shape

Apollo Chief Economist

The US consumer is in incredible shape.

Specifically:

– The incoming weekly data shows continued strength in consumer spending, and outlook surveys show continued strength ahead (Charts 1 to 3).

– Credit card debt as a share of disposable income is below pre-pandemic levels (Chart 4).

– The effective interest rate on mortgage debt outstanding is only 4% (Chart 5).

– Households are reporting that it is easier to get access to credit, and banks are more willing to lend to consumers (Charts 6 and 7).

– HELOC balances are rising, and savings are rising for most households across the income distribution (Charts 8 and 9).

– Debt to disposable income is declining, and US households are in much better shape than households in Canada and Australia (Chart 10).

The bottom line is that incomes are high, stock prices are high, home prices are high, debt levels are low, interest rate sensitivity is low, and banks are more willing to lend to households.

There are significant upside risks to US growth, inflation, and interest rates as we enter 2025.

Consensus revising higher the 2025 outlook for the US consumer
Source: Bloomberg, Apollo Chief Economist
Weekly retail sales strong
Source: Redbook, Haver Analytics, Apollo Chief Economist
Texas retail outlook survey indicates a rebound in sales activity
Note: Data was collected December 17–25, and 271 of the 379 Texas service sector business executives surveyed submitted responses. The Dallas Fed conducts the Texas Service Sector Outlook Survey monthly to obtain a timely assessment of the state’s service sector activity. Firms are asked whether revenue, employment, prices, general business activity and other indicators increased, decreased or remained unchanged over the previous month. Source: Federal Reserve Bank of Dallas, Haver Analytics, Apollo Chief Economist
Credit card debt as a share of disposable income very low
Source: FRB, BEA, Haver Analytics, Apollo Chief Economist
Effective outstanding mortgage rate is 4%
Note: The effective interest rate (%) reflects the amortization of initial fees and charges over a 10-year period, which is the historical assumption of the average life of a mortgage loan. Source: Freddie Mac, BEA, Bloomberg, Apollo Chief Economist
The share of households reporting it is harder to obtain credit than one year ago
Note: Harder = much harder + somewhat harder. Source: FRBNY, Haver Analytics, Apollo Chief Economist
Banks more willing to lend to consumers
Source: FRB, Bloomberg, Apollo Chief Economist
Home equity lines of credit (HELOC) balances have increased
Source: New York Fed Consumer Credit Panel/ Equifax, Apollo Chief Economist
Savings across the income distribution
Source: FRB, Haver Analytics, Apollo Chief Economist
US household balance sheets are in excellent shape
Source: Statistics Canada, Reserve Bank of Australia, Bloomberg, Apollo Chief Economist

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