October 19, 2021
Michelle Wan, CFA, Investment Strategy Analyst
Strong consumer balance sheets may power Q4 demand
On average, the U.S. consumer is in good shape
Consumer finances after the 2020 recession have held up far better than they did after the financial crisis in 2008-2009. The charts show that consumer debt payments as a percentage of disposable personal income continue to drop, while household net worth has spiked higher.
Support has come from ample savings, gains in wealth from rising stock and home values, the lift to cash flow from mortgage refinancing, and respectable gains in earned income.
What it may mean for investors
We believe the recovery is poised to regain momentum from its current soft patch, supporting a full-year U.S. gross domestic product growth forecast of 6.3% in 2021, which would be the strongest expansion in the past 35 years.
Forecasts and targets are based on certain assumptions and on views of market and economic conditions which are subject to change.
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