Donkey Deac Doug
Loves Dicks
In terms of what those charts (or similar ones I've seen) mean for the broader economy, I think it shows there is a lag that happens when thing start to contract. Savings were built up when things were good (and even during the pandemic), but now those personal savings are being depleted and a lot of folks are back to living paycheck to paycheck without much of a cushion to depend on.
Throw in inflation and supply chain issues (and all kinds of other variables) and it is easy to understand why it is so difficult to forecast economic growth.
I still tend to feel pretty negative... But maybe there is some comfort to be taken from the fact that things haven't fallen apart yet.
This is the kicker for me.
I don't want to get a reputation as a doom-sayer. I was optimistic about the bull market until it completely decoupled from reality.
I knew that savings would be depleted - with inflation at 8%+, it has to deplete. My issue is how quickly it's depleting. It would have been fine to be where we are in July of next year.
However, we're getting too many trains on the tracks - layoffs are still just getting started from the Fed's interest rate hikes. We STILL haven't seen a recovery in the low-end-job sector (fast food still can't hire enough workers).
I had thought that the market was fairly oversold, but if debt is climbing this fast and the job market is still on life support, we're setting things up for a loop of decline.
It's ok if interest rates rise to prevent inflation.
It's ok if we have trouble hiring entry level positions.
It's ok if the individual debt burden goes up (even parabolic).
It's ok if we have widespread white-collar layoffs.
It's ok if we tank individual savings.
It's ok when we increase the national debt.
But it's not ok if all of these things happen at once (or nearly simultaneous). This is how you undermine faith in the financial system.
If holiday shopping numbers come back bad initially, we will see some brutal runs. If it happens, I think we start to spiral and I think it takes five years to a decade to recover from it.