Consumer Outlook

Apollo Chief Economist

With cash in checking accounts being less sensitive to interest rates, the bottom line is that it will require many more Fed hikes to cool down the economy because consumer spending is driven not only by borrowing but also by the amount of liquid cash households hold in bank accounts. In other words, it is going to take some time before overall consumer spending starts to meaningfully slow down.

Households have $2.5 trillion in excess dry powder, saved during the pandemic
Note: Bloomberg, Apollo Chief Economist
Share of US total consumer spending, by income
Source: Consumer Expenditure Survey, Haver Analytics, Apollo Chief Economist
Household savings across different income groups
Source: FRB, Haver Analytics, Apollo Chief Economist

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