The United States: Is the overall family economy healthy
2024-03-12
■ From a stock perspective, the support for personal consumption has weakened, although it is still very strong.
■ The polarization of the household economy between income classes is intensifying, but is it generally healthy?
The savings rate (savings/disposable income) in January was 3.8%, significantly lower than the average level from 2015 to 2019 (6.2%). The year-on-year growth rate of real wages in January (average hourly wage - consumer price index) was 1.4%, exceeding the average level from 2015 to 2019 (1.2%). From the perspective of mobility, it can be seen that the growth of real wages supported personal consumption.
From a stock perspective, the decline in excess savings has been contained to a certain extent. According to the fund cycle statistics for the October-December quarter of last year released by the Federal Reserve on the 7th, U.S. household savings (the sum of ordinary/current deposits, savings/time deposits, and money market funds) were US$17.0 trillion. Although it has been on a downward trend since peaking in the January-March quarter of 2022 ($17.4 trillion), it has started to grow since the July-September quarter of last year ($16.7 trillion). Additionally, assuming the average trend from 2015 to 2019 continues today, household savings would be estimated at the current level of $16.0 trillion. Defining the upward deviation of this estimate from the trend as excess savings, excess savings currently stands at $1.01 trillion. Although from a stock perspective, the support for personal consumption has weakened, it still shows its strength.
According to the quarterly report on household debt and credit balance released by the Federal Reserve Bank of New York on February 6th, the credit card debt balance reached a historic high of $1.13 trillion from October to December last year. In this situation, the new overdue rate of credit cards is on the rise, currently at 8.5%, which has risen to the level of the April-June quarter of 2011, and excess savings are mainly concentrated in low-income groups, forcing them to rely on credit cards for consumption. On the other hand, the usage limit of credit cards has been expanding. After the subprime crisis (July-September 2008: US $3.7 trillion → October December 2010: US $2.7 trillion) and during the COVID-19 (April-June 2020: US $3.9 trillion → March 2021: US $3.8 trillion), the use limit of credit cards was once restricted, but now it has reached US $4.79 trillion, constantly breaking the record, Credit card issuing companies currently do not seem to be showing strong vigilance in terms of credit granting. Although the American household economy is affected by income inequality, it is generally considered to be in a healthy state.
■ The polarization of the household economy between income classes is intensifying, but is it generally healthy?
The savings rate (savings/disposable income) in January was 3.8%, significantly lower than the average level from 2015 to 2019 (6.2%). The year-on-year growth rate of real wages in January (average hourly wage - consumer price index) was 1.4%, exceeding the average level from 2015 to 2019 (1.2%). From the perspective of mobility, it can be seen that the growth of real wages supported personal consumption.
From a stock perspective, the decline in excess savings has been contained to a certain extent. According to the fund cycle statistics for the October-December quarter of last year released by the Federal Reserve on the 7th, U.S. household savings (the sum of ordinary/current deposits, savings/time deposits, and money market funds) were US$17.0 trillion. Although it has been on a downward trend since peaking in the January-March quarter of 2022 ($17.4 trillion), it has started to grow since the July-September quarter of last year ($16.7 trillion). Additionally, assuming the average trend from 2015 to 2019 continues today, household savings would be estimated at the current level of $16.0 trillion. Defining the upward deviation of this estimate from the trend as excess savings, excess savings currently stands at $1.01 trillion. Although from a stock perspective, the support for personal consumption has weakened, it still shows its strength.
According to the quarterly report on household debt and credit balance released by the Federal Reserve Bank of New York on February 6th, the credit card debt balance reached a historic high of $1.13 trillion from October to December last year. In this situation, the new overdue rate of credit cards is on the rise, currently at 8.5%, which has risen to the level of the April-June quarter of 2011, and excess savings are mainly concentrated in low-income groups, forcing them to rely on credit cards for consumption. On the other hand, the usage limit of credit cards has been expanding. After the subprime crisis (July-September 2008: US $3.7 trillion → October December 2010: US $2.7 trillion) and during the COVID-19 (April-June 2020: US $3.9 trillion → March 2021: US $3.8 trillion), the use limit of credit cards was once restricted, but now it has reached US $4.79 trillion, constantly breaking the record, Credit card issuing companies currently do not seem to be showing strong vigilance in terms of credit granting. Although the American household economy is affected by income inequality, it is generally considered to be in a healthy state.