Chart of the Week
Many market commentators focused on the increasing level of household debt of late. While this is true, many forget that the economy is much larger. Over the past five years, revolving credit increased 23%. Yet over that same time, the economy, as measured by nominal GDP, is 32% higher.
While interest rates increased sharply over the past two years, households have lower debt service than any time before 2010. When we include rent, the data is still below average since 1980.
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This data bodes well as we look into 2024. We should monitor credit delinquencies, which moved up from record low levels. Given the cash and money markets in bank accounts, the consumer might be in a stronger position than the headlines suggest.
What We’re Reading
Charlie Munger – Wit & Wisdom from the Most Irreverent Billionaire – Farnam Street
Why Bonds Are Making a Huge Comeback – Morningstar
Should you care what Wall Street strategists have to say about 2024? – Tker
Podcast of the Week
A Conversation with Charlie Munger – Invest Like the Best
Last Week
Two major datapoints from this past week were good news for the economy. Jobs outpaced estimates, and the unemployment rate fell to 3.7%. The core inflation data came in at expectations, which carries more weight with markets today. However, the headline inflation number was up 0.1%.
The Week Ahead
All eyes are on Wednesday’s Federal Reserve’s Open Market Committee meeting. Investors will be looking for clues about the Fed’s outlook in 2024 and a discussion of possible interest rate cuts.
Thank you for reading.
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