Thoughts on the Market What’s Weighing on U.S. Consumer Confidence?
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Apr 2, 2025 Experts dive into the shifting landscape of U.S. consumer confidence, tracing its evolution amid ongoing policy changes. They discuss the troubling rise in delinquency rates for auto loans and mortgages, highlighting disparities across income levels. The impact of tariffs and post-COVID financial dynamics on spending habits is also analyzed. Additionally, the challenges in the housing market, like affordability and low inventory, are explored, shedding light on their influence on consumer confidence and overall economic stability.
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Consumer Spending Trends
- Consumer spending growth outpaced pre-COVID averages in 2024, driven by labor income and wealth accumulation.
- However, lower and middle-income consumers are feeling stretched, as seen in rising delinquencies.
Delinquency Trends
- Delinquencies are rising across auto loans and mortgages, especially among lower-income consumers and in specific market segments.
- However, defaults and losses are not increasing at the same rate, suggesting consumers are not rolling into default as quickly as historically observed.
Tariff Impacts on Consumers
- Consumers may engage in expenditure switching to cope with tariffs, but broader tariff uncertainty makes this less feasible.
- Lower-income consumers are disproportionately affected by tariffs due to their spending patterns.