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Jim Walker of Aletheia Capital discusses the recent policy package from the Chinese central bank and regulators and why he thinks there will not be a bazooka-style stimulus like there was in the past.
03:14
Tue, Sep 24 202411:28 PM EDT
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Tag: Breaking News: Economy
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India rules out joining world’s largest trade deal, accuses China of ‘very opaque’ trade practices
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Indian flag and Chinese flag displayed on screen.
Anadolu | Anadolu | Getty Images
India’s commerce minister rejected the idea of joining the Regional Comprehensive Economic Partnership, the world’s largest trade deal, maintaining that it is not in the country’s interest to be part of a free trade agreement with China.
“India is not going to join the RCEP because neither did it reflect the guiding principles on which ASEAN was started, nor is it in the nation’s interest to do a free trade agreement with China,” India’s Minister of Commerce and Industry Piyush Goyal told CNBC’s Tanvir Gill in an interview.
The RCEP deal was signed in 2020 by 15 Asia-Pacific countries — which makes up out 30% of global GDP — and came into force in January 2022. The countries are the 10 members of the Association of Southeast Asian Nations, and five of their largest trading partners, China, South Korea, Japan, Australia and New Zealand.
Negotiations for the RCEP started in 2013 and initially included India, which some members viewed as a counterbalance to China. However, in 2019, India chose not to join RCEP, citing unresolved “core interest” issues. Back then, India did not expand on what some of those core unresolved interests were.
Goyal noted that at that time, India already had a free trade agreement with ASEAN, Japan and Korea, as well as a bilateral trade with New Zealand worth $300 million.
“It was not in our farmers’ interest, RCEP did not reflect the aspirations of our small and micro medium industries and sector, and in some form, was nothing but a free trade agreement with China,” he said.
“When you see from the lens sitting outside the country, you don’t realize how difficult it is to compete against a non-transparent economy,” the minister continued, in reference to China.
“Certainly nobody back home would like to have an FTA with [a] non-transparent economy, very opaque in its economic practices, where both trading systems, political systems, the economy — the way it is managed — is completely different from what the democratic world wants.”
Goyal also accused China of using the World Trade Organization’s policies to its advantage, flooding various economies with goods at low prices which often do not meet quality standards.
From solar panels to cars to steel, China has recently been churning out more goods in an economy that has been slow to absorb, resulting in a surge of cheap exports to foreign markets.
Semiconductor ambitions
The minister also made a strong case for India to become a Taiwan “plus one” semiconductor country.
“China Plus One” is a phrase used to describe a supply chain strategy that sees companies diversifying manufacturing and sourcing, by continuing operations in the mainland while also expanding into other countries. This approach aims to reduce risks linked to complete reliance on a single country’s market or supply chain.
Spinning off that idea, Goyal thinks India can become an alternative place in the region for companies that want to diversify outside of Taiwan for semiconductors.
“We are encouraging [the] semiconductor industry in a big way. We started building up the ecosystem, which is essential before we can see more and more foundries coming into the country for the actual chip making,” Goyal said.
“We expect the demand for semiconductor products to be about $100 billion by 2030, and will grow exponentially thereafter,” he said, adding that interest in India’s semiconductor industry is expanding “by leaps and bounds.”
India aims to establish itself as a major chips hub similar to the U.S., Taiwan, and South Korea, actively seeking foreign companies to set up their operations in the country.
Earlier this year, Prime Minister Narendra Modi inaugurated three semiconductor plants, bringing the total count of plants under development in India to four. One of those plants is a joint venture between Tata Electronics and Taiwan’s Powerchip Semiconductor Manufacturing Corp. The plant, which is set up in Dholera, Gujarat state, is expected to deliver its first batch of semiconductors by late 2025 or early 2026.
Asked if India can be Taiwan’s “plus one” in the semiconductor space, Goyal said that his country’s size, democracy and rule of law means it is a “safe habor.”
“It provides an alternative where you will always have a youthful population in life, huge demand, and you will have the rule of law to back it. I think that’s a very compulsive case,” he said.
The world recognizes that excessive concentration in any one region is fraught with serious risks, Goyal added.
India’s chip strategy has two main components: attracting foreign companies to establish operations and invest in the country, as well as forming partnerships with other major semiconductor nations, such as the U.S. In 2021, the government approved a $10 billion incentive program for the sector, which is also available to foreign companies.
As of 2024, Taiwan, the world’s chipmaking powerhouse, is expected to hold around 44% of global market share, followed by China with 28% and South Korea with 12%, according to a report. The U.S. and Japan account for 6% and 2%, respectively.
The authors of the report, Taiwan consultancy Trendforce, said Taiwan’s global capacity share in advanced manufacturing processes is expected to decrease to 40% by 2027, while South Korea’s could see a 2% decline. In the same time period, China’s is expected to increase by 3% to 31%.
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Bajaj Housing Finance: Near-term opportunity ahead for India’s housing market
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Sanjiv Bajaj, Chairman of Bajaj Housing Finance, shares his thoughts on the property and home loan market in India and his outlook for the broader economy.
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KBW CEO Tom Michaud on the Fed’s rate decision, state of banking sector and Basel III requirements
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Thomas Michaud, KBW president and CEO, joins ‘Squawk Box’ to discuss this week’s Fed interest rate decision, what to make of the recent volatility in bank stocks, impact of new Basel III requirements on the banking sector, and more.
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Axis AMC CIO: Banking earnings to “be more muted” this year
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Ashish Gupta, CIO at Axis Mutual Fund sees a pickup in Indian IPOs in response to increased demand to invest in the Indian market, but a more muted earnings picture for banks as the Reserve Bank of India looks to cut rates in 2024.
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Wells Fargo cannot expand into certain high risk areas without permission, regulator says
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CNBC’s Kate Rooney joins ‘Power Lunch’ to discuss the Office of the Comptroller of the Currency issuing an enforcement action against Wells Fargo due to deficiencies in its risk management practices.
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Latest housing market data and August CPI are showing two different stories: Andy Walden
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Andy Walden, Intercontinental Exchange VP of research and analysis, joins ‘Fast Money’ to talk today’s CPI read, the housing market, and more.
04:34
an hour ago
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Investors buying regional banks have to believe a soft landing is coming: Piper Sandler’s Siefers
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Scott Siefers, Piper Sandler senior analyst, joins ‘Closing Bell Overtime’ to talk pressure on the bank sector.
04:51
Tue, Sep 10 20245:41 PM EDT
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Be a buyer in an oversold condition of financials as it develops, says Strategas’ Chris Verrone
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Chris Verrone, Strategas Research Partners head of technical and macro research, joins ‘Closing Bell’ to discuss the tech and financial trades and market seasonality.
04:30
Tue, Sep 10 20244:11 PM EDT
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U.S. airlines cool hiring after adding 194,000 employees in post-Covid spree
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A pilot performs a walkaround before a United Airlines flight
Leslie Josephs/CNBC
U.S. passenger airlines have added nearly 194,000 jobs since 2021 as companies went on a hiring spree after spending months in a pandemic slump, according to the U.S. Department of Transportation. Now the industry is cooling its hiring.
Airlines are close to their staffing needs but the slowdown is also coming in part because they’re facing a slew of challenges.
A glut of flights in the U.S. has pushed down fares and eaten into airlines’ profits. Demand growth has moderated. Airplanes are arriving late from Boeing and Airbus, prompting airlines to rethink their expansions. Engines are in short supply. Some carriers are deferring airplane deliveries altogether. And labor costs have climbed after groups like pilots and mechanics inked new contracts with big raises, their first in years.
Annual pay for a three-year first officer on midsized equipment at U.S. airlines averaged $170,586 in March, up from $135,896 in 2019, according to Kit Darby, an aviation consultant who specializes in pilot pay.
Since 2019, costs at U.S. carriers have climbed by double-digit percentages. Stripping out fuel and net interest expenses, they’ll be up about 20% at American Airlines this year and around 28% higher at both United Airlines and Delta Air Lines from 2019, according to Raymond James airline analyst Savanthi Syth.
It is more pronounced at low-cost airlines. Southwest Airlines‘ costs will likely be up 32%, JetBlue Airways‘ up nearly 35% and Spirit Airlines will see a rise of almost 39% over the same period, estimated Syth, whose data is adjusted for flight length.
Easing hiring
Friday’s U.S. jobs report showed air transportation employment in August roughly in line with July’s.
But there have been pullbacks. In the most severe case, Spirit Airlines furloughed 186 pilots this month, their union said Sunday, as the carrier’s losses have grown in the wake of a failed acquisition by JetBlue Airways, a Pratt & Whitney engine recall and an oversupplied U.S. market. Last year, even before the merger fell apart, it offered staff buyouts.
Other airlines are easing hiring or finding other ways to cut costs.
Frontier Airlines is still hiring pilots but said it will offer voluntary leaves of absence in September and October, when demand generally dips after the summer holidays but before Thanksgiving and winter breaks. A spokeswoman for the carrier said it offers those leaves “periodically” for “when our staffing levels exceed our planned flight schedules.”
Southwest Airlines expects to end the year with 2,000 fewer employees compared with 2023 and earlier this year said it would halt hiring classes for work groups including pilots and flight attendants. CFO Tammy Romo said on an earnings call in July that the company’s headcount would likely be down again in 2025 as attrition levels exceed the Dallas-based carrier’s “controlled hiring levels.”
United Airlines, which paused pilot hiring in May and June, citing late-arriving planes from Boeing, said it plans to add 10,000 people this year, down from 15,000 in each 2022 and 2023. It plans to hire 1,600 pilots, down from more than 2,300 last year.
It’s a departure from the previous years when airlines couldn’t hire employees fast enough. U.S. airlines are usually adding pilots constantly since they are required to retire at age 65 by federal law.
Airlines shed tens of thousands of employees in 2020 to try to stem record losses. Packages of more than $50 billion in taxpayer aid that were passed to get the industry through its worst-ever crisis prohibited layoffs, but many employees took carriers up on their repeated offers of buyouts and voluntary leaves.
Then, travel demand snapped back faster than expected, climbing in earnest in 2022 and leaving airlines without experienced employees like customer service agents. It also led to the worst pilot shortage in recent memory.
In response, companies — especially regional carriers — offered big bonuses to attract pilots.
But times have changed. Even air freight giants were competing for pilots in recent years but demand has waned as FedEx and UPS look to cut costs.
American Airlines CEO Robert Isom said in an investor presentation in March that the carrier added about 2,300 pilots last year and that it expects to hire about 1,300 this year.
“We will be hiring for the foreseeable future at levels like that,” he said at the time.
Despite the lower targets, students continue to fill classrooms and cockpits to train and build up hours to become pilots, said Ken Byrnes, chairman of the flight department at Embry-Riddle Aeronautical University.
“Demand for travel is still there,” he said. “I don’t see a long-term slowdown.”
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How Gen Z is beating Millennials in the homeownership race
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In 2023, the homeownership rate for adult Gen Zers was higher than the homeownership rate for millennials and Gen X when they were 24, according to Redfin.
11:00
Thu, Sep 5 202411:06 AM EDT
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Housing is ‘everything’ for this economy, says 3Fourteen’s Warren Pies
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Warren Pies, 3Fourteen Research co-founder, joins ‘Closing Bell Overtime’ to talk a recent slate of housing data boosting homebuilders.
04:40
3 hours ago
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Housing market is looking positive going into fall with rate cut expectations, says Bess Freedman
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Andy Walden, ICE vice president of enterprise research; Bess Freedman, Brown Harris Stevens CEO; and David Tinsley, Bank of America Institute senior economist, join CNBC’s ‘The Exchange’ to discuss the housing market.
05:35
Fri, Aug 23 20242:30 PM EDT
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Banks will continue to outperform if the Fed starts to cut and there’s a soft landing: RBC’s Cassidy
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Gerard Cassidy, RBC Capital Markets co-head of global financials research, joins ‘Squawk on the Street’ to discuss the latest market trends, state of the banking sector, impact of the Fed’s rate outlook and 2024 election on banks, and more.
04:04
Fri, Aug 23 202410:14 AM EDT
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Nonfarm payroll growth revised down by 818,000, Labor Department says
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The U.S. economy created 818,000 fewer jobs than originally reported in the 12-month period through March 2024, the Labor Department reported Wednesday.
As part of its preliminary annual benchmark revisions to the nonfarm payroll numbers, the Bureau of Labor Statistics said the actual job growth was nearly 30% less than the initially reported 2.9 million from April 2023 through March of this year.
The revision to the total payrolls level of -0.5% is the largest since 2009. The numbers are routinely revised each month, but the BLS does a broader revision each year when it gets the results of the Quarterly Census of Employment and Wages.
Wall Street had been waiting for the revisions numbers, with many economists expecting a sizeable reduction in the originally reported figures. The new numbers, if they hold up when the BLS issues its final revisions in February, imply monthly job gains of 174,000 during the period, as opposed to the initial indication of 242,000.
Even with the revisions, job creation during the period stood at more than 2 million, but the report could be seen as an indication that the labor market is not as strong as the previous BLS reporting had made it out to be. That in turn could provide further impetus for the Federal Reserve to start lowering interest rates.
“The labor market appears weaker than originally reported,” said Jeffrey Roach, chief economist at LPL Financial. “A deteriorating labor market will allow the Fed to highlight both sides of the dual mandate and investors should expect the Fed to prepare markets for a cut at the September meeting.”
At the sector level, the biggest downward revision came in professional and business services, where job growth was 358,000 less. Other areas revised lower included leisure and hospitality (-150,000), manufacturing (-115,000), and trade, transportation and utilities (-104,000).
Within the trade category, retail trade numbers were cut by 129,000.
A few sectors saw upward revisions, including private education and health services (87,000), transportation and warehousing (56,400), and other services (21,000).
Government jobs were little changed after the revisions, picking up just 1,000.
Nonfarm payroll jobs totaled 158.7 million through July, an increase of 1.6% from the same month in 2023. There have been concerns, though, that the labor market is starting to weaken, with the rise in the unemployment rate to 4.3% representing a 0.8 percentage point gain from the 12-month low and triggering a historically accurate measure known as the “Sahm Rule” that indicates an economy in recession.
However, much of the gain in the unemployment rate has been attributed to an increase in people returning to the workforce rather than a pronounced surge in layoffs.
“This preliminary estimate doesn’t change the fact that the jobs recovery has been and remains historically strong, delivering solid job and wage gains, strong consumer spending, and record small business creation,” White House economist Jared Bernstein said in a statement.
To be sure, economists at Goldman Sachs said later Wednesday that they think the BLS may have overstated the revisions by as much as half a million. The firm said undocumented immigrants who now are not in the unemployment system but were listed initially as employed amounted for some of the discrepancy, along with a general tendency for the initial revision to be overstated.
Federal Reserve officials nonetheless are watching the jobs situation closely and are expected to approve their first interest rate cut in four years when they next meet in September. Chair Jerome Powell will deliver a much-anticipated policy speech Friday at the Fed’s annual retreat in Jackson Hole, Wyoming, that could lay the groundwork for easier monetary policy ahead.
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U.S. job growth revised down by the most since 2009. Why this time is different
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People line up as they wait for the JobNewsUSA.com South Florida Job Fair to open at the Amerant Bank Arena on June 26, 2024, in Sunrise, Florida.
Joe Raedle | Getty Images
There’s a lot of debate about how much signal to take from the 818,000 downward revisions to U.S. payrolls — the largest since 2009. Is it signaling recession?
A few facts worth considering:
- By the time the 2009 revisions came out (824,000 jobs were overstated), the National Bureau of Economic Research had already declared a recession six months earlier.
- Jobless claims, a contemporaneous data source, had surged north of 650,000, and the insured unemployment rate had peaked at 5% that very month.
- GDP as reported at the time had already been negative for four straight quarters. (It would subsequently be revised higher in the two of those quarters, one of which was revised higher to show growth, rather than contraction. But the economic weakness was broadly evident in the GDP numbers and ISMs and lots of other data.)
The current revisions cover the period from April 2023 to March, so we don’t know whether current numbers are higher or lower. It may well be that the models used by the Bureau of Labor Statistics are overstating economic strength at a time of gathering weakness. While there are signs of softening in the labor market and the economy, of which this could well be further evidence, here’s how those same indicators from 2009 are behaving now:
- No recession has been declared.
- The 4-week moving average of jobless claims at 235,000 is unchanged from a year ago. The insured unemployment rate at 1.2% has been unchanged since March 2023. Both are a fraction of what they were during the 2009 recession.
- Reported GDP has been positive for eight straight quarters. It would have been positive for longer if not for a quirk in the data for two quarters in early 2022.
As a signal of deep weakness in the economy, this big revision is, for now, an outlier compared to the contemporaneous data. As a signal that job growth has been overstated by an average of 68,000 per month during the revision period, it is more or less accurate.
But that just brings average employment growth down to 174,000 from 242,000. How the BLS parcels out that weakness over the course of the 12-month period will help determine if the revisions were concentrated more toward the end of the period, meaning they have more relevance to the current situation.
If that is the case, it is possible the Fed might not have raised rates quite so high. If the weakness continued past the period of revisions, it is possible Fed policy might be easier now. That is especially true if, as some economists expect, productivity numbers are raised higher because the same level of GDP appears to have occurred with less work.
But the inflation numbers are what they are, and the Fed was responding more to those during the period in question (and now) than jobs data.
So, the revisions might modestly raise the chance of a 50 basis-point rate reduction in September for a Fed already inclined to cut in September. From a risk management standpoint, the data might add to concern that the labor market is weakening faster than previously thought. In the cutting process, the Fed will follow growth and jobs data more closely, just as it monitored inflation data more closely in the hiking process. But the Fed is likely to put more weight on the current jobless claims, business surveys, and GDP data rather than the backward looking revisions. It’s worth noting that, in the past 21 years, the revisions have only been in the same direction 43% of the time. That is, 57% of the time, a negative revisions is followed the next year by a positive one and vice versa.
The data agencies make mistakes, sometimes big ones. They come back and correct them often, even when it’s three months before an election.
In fact, economists at Goldman Sachs said later Wednesday that they think the BLS may have overstated the revisions by as much as half a million. Unauthorized immigrants who now are not in the unemployment system but were listed initially as employed amounted for some of the discrepancy, along with a general tendency for the initial revision to be overstated, according to the Wall Street firm.
The jobs data could be subject to noise from immigrant hiring and can be volatile. But there is a vast suite of macroeconomic data that, if the economy were tanking like in 2009, would be showing signs of it. At the moment, that is not the case.
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Harris outlines an ‘opportunity economy’ centered on cutting food, housing, family costs
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U.S. Vice President and Democratic presidential candidate Kamala Harris speaks at an event at the Hendrick Center for Automotive Excellence in Raleigh, North Carolina, U.S., August 16, 2024.
Jonathan Drake | Reuters
Vice President Kamala Harris on Friday delivered an economic policy pitch aimed to appeal to middle-class voters by focusing on lowering the costs of food, housing, health care and childcare.
In a speech in Raleigh, North Carolina, the Democratic presidential nominee sketched a vision of what she described as an “opportunity economy,” with basic financial security at its core.
Her plan would impose a federal ban on price gouging on groceries, enact a new $6,000 child tax credit for families with newborn children and give first-time home buyers $25,000 in down-payment support, among a slew of other proposals.
Harris framed it in stark contrast to the proposals put forward by her rival, former President Donald Trump.
She blasted the Republican nominee’s support for sweeping tariffs on imported goods as a “Trump tax,” while accusing him of seeking to cut taxes on billionaires and corporations.
“I think that if you want to know who someone cares about, look who they fight for,” Harris said.
While still light on specific details, her plans have already garnered fierce criticism from Republicans and economic analysts who have warned that they veer toward government price fixing.
“Having the government set prices is a really, really big mistake,” said Kevin Hassett, a top economic advisor in the Trump White House, during a press call earlier Friday.
The nonprofit Committee for a Responsible Federal Budget, meanwhile, estimated that the policies in Harris’ economic plan would raise deficits by $1.7 trillion over the next 10 years.
Friday’s address was Harris’ first policy speech since she took over from President Joe Biden following his withdrawal from the race last month.
With less than 90 days until Election Day, Harris is working to take credit for the Biden administration’s economic accomplishments, while trying to flip the script on a key issue where her predecessor got consistently low marks.
Here’s what else her economic plan includes, according to her campaign.
Groceries and food
In an effort to tackle the stubbornly high price of groceries, Harris will work with Congress to advance the first-ever federal ban on “corporate price-gouging” on food and groceries.
This would include setting “clear rules of the road” so that corporations “can’t unfairly exploit consumers to run up excessive corporate profits” on grocery staples, according to the fact sheet.
To investigate and penalize alleged violations, Harris would empower the Federal Trade Commission and state attorneys general.
A Harris administration would also take an aggressive regulatory approach to proposed mergers and consolidation among the biggest food producers.
Affordable housing and rent
Harris’ plan would help cash-strapped renters by blocking data firms from hiking lease rates, and by preventing Wall Street investors from buying homes in bulk to resell at a premium.
U.S. President Joe Biden raises the hand of Vice President Kamala Harris, during an event on Medicare drug price negotiations, in Prince George’s County, Maryland, U.S., August 15, 2024.
Ken Cedeno | Reuters
Harris will also call for the U.S. to construct 3 million new housing units over the next four years. In order to facilitate that, she will call for new tax incentives for builders who construct “starter homes.”
Any changes to the tax code require congressional approval, and depend heavily on which party controls the House and Senate.
As the supply of entry-level homes expanded, the Harris plan would “provide working families who have paid their rent on time for two years and are buying their first home up to $25,000 in down-payment assistance, with more generous support for first-generation homeowners,” according to the fact sheet.
Health-care costs
Harris would seek to expand the Biden administration’s landmark $35 price cap on insulin for Medicare recipients to cover insulin for all Americans, not just the elderly.
US President Joe Biden along with vice president Kamala Harris (not seen) and North Carolina governor Roy Cooper (not seen) delivers remarks about healthcare in Raleigh, North Carolina, United States on March 26, 2024.
Peter Zay | Anadolu | Getty Images
Similar to her cost-cutting plans for the food industry, Harris’ health-care policy relies in part on stiffer regulations and strict antitrust enforcement.
The plan calls for “cracking down on pharmaceutical companies who block competition and abusive practices by pharmaceutical middlemen,” according to the Harris campaign.
Tax cuts
Restoring the expanded child tax credits that were first introduced during the Covid pandemic is a longstanding goal of the Biden administration, and one that Harris will take up if she is elected president.
She will also go one step further, and propose expanded tax relief of up to $6,000 for families with a newborn.
The Harris campaign calls this a “year when many family’s expenses are highest—with cribs, diapers, car seats and more.” It also notes that many parents who do not have access to paid leave are forced to choose between spending time with their baby and working enough hours to make ends meet.
The stakes
After just three weeks on the campaign trail, Harris has erased the polling advantage that Trump held over Biden.
But the vice president has largely steered clear of policy specifics, choosing instead to draw contrasts with Trump.
With her Tar Heel State address, Harris began to articulate a vision for the economy that builds on — and in some ways pivots away from — the Biden’s administration’s economic record.
On Thursday, Harris and Biden appeared together in Maryland to tout an agreement with pharmaceutical companies to lower the cost of the 10 priciest prescription drugs under Medicare.
U.S. President Joe Biden embraces Vice President Kamala Harris at an event on Medicare drug price negotiations, in Prince George’s County, Maryland, U.S., August 15, 2024.
Elizabeth Frantz | Reuters
The landmark negotiations — enabled through Biden’s centerpiece spending legislation, the Inflation Reduction Act — will lead to around $6 billion in net savings for Medicare when they officially go into effect in 2026, according to the government.
The vice president’s speech came just two days after Trump gave his own economy-focused speech in North Carolina.
Speaking in Asheville, Trump fired off personal attacks at Harris while blaming her for the high consumer prices that Biden has spent much of his presidency working to reverse.
Recent polls suggest the state that Trump won in both the 2016 and 2020 presidential elections is now within reach for Harris in 2024.
A new round of battleground state poll results released Wednesday by the Cook Political Report showed Harris leading Trump in North Carolina by 1 percentage point, 48 – 47, still well within the survey’s margin of error.
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Pendal: Liquidating mainland property companies a step in the right direction
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Amy Xie Patrick, Head of Income Strategies at Pendal discusses the systemic issues facing the Chinese economy and the effects of liquidating Chinese property companies.
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59% of Americans wrongly think the U.S. is in a recession, report finds
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We are not in a recession
“Right now we have a ‘Goldilocks’ economy,” said Gene Goldman, chief investment officer at Cetera Financial Group in El Segundo, California.
The country’s economy has continued to expand since the Covid-19 pandemic, sidestepping earlier recessionary forecasts.
Officially, the National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” The last time that happened was early in 2020, when the economy came to an abrupt halt.
In the last century, there have been more than a dozen recessions, some lasting as long as a year and a half.
Still, regardless of the country’s economic standing, many Americans are struggling in the face of sky-high prices for everyday items, and most have exhausted their savings and are now leaning on credit cards to make ends meet.
“Money is top of mind,” said Vishal Kapoor, senior vice president of product at Affirm. “Consumers are resilient but they’re feeling the pinch of higher prices.”
Economists have wrestled with the growing disconnect between how the economy is doing and how people feel about their financial standing.
We’re in a ‘vibecession’
We’re in a “vibecession,” Joyce Chang, JPMorgan’s chair of global research, said at the CNBC Financial Advisor Summit in May.
Over the last few years “the wealth creation was concentrated amongst homeowners and upper-income brackets,” Chang said, “but you probably have about one-third of the population that’s been left out of that — that’s why there’s such a disconnect.”
Rising rents coupled with high borrowing costs and low wage growth have hit some especially hard. “Lower income households are not keeping up,” Goldman said. “Everything looks great but when you look beneath the surface, the disparity between the wealthy and nonwealthy is widening dramatically.”
It’s not only a “vibe,” however.
As more consumers stretch to cover increased prices and higher interest rates, there are new indications of financial strain.
A growing number of borrowers are falling behind on their monthly credit card payments. Over the last year, roughly 9.1% of credit card balances transitioned into delinquency, the New York Fed reported for the second quarter of 2024. And more middle-income households anticipate struggling with debt payments in the coming months.
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Monetary policy is not enough to foster growth as we need federal investments: Illimity CEO
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Corrado Passera, CEO of Illimity, discusses the Italian bank’s half-year results and the impact of European monetary policy.
02:45
Fri, Aug 9 202410:17 AM EDT
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