The Commerce Department is reporting that the US economy expanded at a much faster pace in the first three months of the year than previously estimated. Consumer spending accounts for about 70% of America’s gross domestic product, the broadest measure of the economy, so it’s nearly impossible to enter a recession when spending is growing. Over the pandemic, historic levels of stimulus cash boosted household income significantly. Spending, meanwhile, was severely curtailed as the economy shut down. Personal saving rates soared as a result, with US households amassing about $2.3 trillion in savings in 2020 and through the summer of 2021, according to Federal Reserve economists. That’s about $2 trillion more than they would have saved under normal circumstances.

In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss a warning from the Federal Trade Commission, indicating that scammers are likely to target student loan borrowers after the Supreme Court struck down the Biden administration’s debt forgiveness plan, and as loan repayments are poised to restart in the fall.

Chris and Saied look at a report from payroll processing firm ADP, showing that private sector jobs surged by 497,000 for the month, well ahead of the downwardly revised 267,000 gain in May and much better than the 220,000 Dow Jones consensus estimate. The increase resulted in the biggest monthly rise since July 2022.

They also offer some thoughts on comments from Epiq Bankruptcy, a provider of US bankruptcy filing data, which claims that Chapter 11 bankruptcy filings jumped 68% in the first half of 2023 from a year earlier.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

• Why Forbes thinks inflation is keeping the housing market afloat for now.
• Why the credit tightening cycle has not yet begun.
• Why office mortgage delinquencies have suffered the biggest six-month spike in 20 years.
• And so much more...

Resources:

(Chart of the Day via Instagram)

"The Fed can’t decide how much money US households have left" (CNN)

"Mortgage rates hit the highest point of the year" (Yahoo! Finance)

"America's economy rapidly shifts south" (Axios)

"Bankruptcy filings surge in first half of 2023 in US, Epiq says" (Reuters)

"CRE Nightmare For CMBS Holders: Office Mortgage Delinquency Rate Suffers Biggest 6-Month Spike Ever" (Zerohedge)

"Private sector companies added 497,000 jobs in June, more than double expectations, ADP says" (CNBC)

"Payrolls report Friday likely to show a jobs market that is still hot" (CNBC)

"Fed sees more rate hikes ahead, but at a slower pace, meeting minutes show" (CNBC)

"FTC warns about student loan scams following Supreme Court decision" (CNBC)

"Corporate America Faces a Bankruptcy Boom" (New York Times)

"Inflation Keeps The Housing Market Afloat — For Now" (Forbes)

"Some Fed Officials Supported Raising Rates in June" (The Wall Street Journal)