Consumers stay strong, but a bear market could change that
SPY•US consumers continue to spend despite high inflation and elevated fuel costs, supported by a healthy labor market and household balance sheets. Carson Group strategist Sonu Varghese says a sustained bear market could erode wealth and threaten spending and economic growth.
1. Spending and jobs hold up
Sonu Varghese, chief macro strategist at Carson Group, says US households remain in surprisingly good shape. Recent retail sales showed solid spending on essentials and discretionary items, including restaurant meals, while jobless claims remain historically low and layoffs subdued.
2. Household finances
Debt relative to income remains well below pre-financial-crisis norms, and household net worth relative to income is at a record high. Varghese says consumers are not borrowing aggressively to fund spending.
3. Market exposure is a risk
Equities account for a record share of household net worth, making consumers more exposed to market swings. Varghese says a sustained bear market could erode household wealth, slow spending, weaken hiring and weigh on economic growth.
