The American Consumer: Employment, Savings, Debt, and Sentiment in Context

• Corey says the consumer data he reviewed is mixed, with some strong readings and some that conflict with each other.

• He describes the unemployment rate and new unemployment claims as historically low, and says that strength could also mean the economy is running a little hot, which may be tied to inflation.

• He says inflation-adjusted household income has been roughly flat for about a year and a half, yet real spending has not slowed.

• He says the personal savings rate is historically low and still trending lower, and he does not know when households might pull back.

• He says consumer credit balances are growing, including student loans and auto loans, while the share of income used to service debt has stayed relatively stable. He wonders whether student loan balances amount to a bubble, and this recap does not endorse that view.

• He points to more younger adults living with their parents, and to weak housing affordability, as one possible reason spending has held up.

• He offers a theory about corporate concentration and consumer sentiment that he says he cannot verify, and he asks viewers whether they agree.

• These are Corey's opinions for education. They are not forecasts, and nothing here is a recommendation about any security.

Corey says he will look at the American consumer across about ten charts, including employment, income, and inflation. He says he will compare and contrast some of the data, some of which is a little conflicting, and that he needs help with one piece of data that he finds hard to explain. He ends with a brief market update, which this recap does not repeat in detail. This recap also does not repeat the specific percentages, dollar amounts, or index levels he mentions.

He gives the standard reminder that the video is a financial education presentation, that viewers should do their own due diligence before acting on anything they hear, and that the opinions are his alone. More disclosure information is available on the firm's website. Economic data is revised often, and a chart describes the past rather than predicting the future.

Corey starts with the civilian unemployment rate, which he describes as historically very low. He contrasts it with the period after the 2008 financial crisis, when finding any job, much less a good one, was very difficult. He says people now hear many more success stories from job seekers.

His second chart shows initial unemployment claims, which he says are trending at or near the lowest levels on the chart. He adds that this could be almost too good, because strong conditions for job seekers may also mean the economy is running a little hot, which may show up on the inflation side. A strong job market can change, and one set of readings does not predict what comes next.

Corey says personal income is growing nicely, though the chart is distorted around the pandemic by stimulus payments. He says real disposable income at the household level has plateaued over roughly the past year and a half. In his view, that may reflect a second surge of inflation that he links to tariffs and higher oil prices.

Even so, he says real consumption has not slowed, so people do not appear to be changing their spending habits because of that inflation. His fourth chart shows the personal savings rate, which he describes as historically low and trending lower from period to period. He says he does not know where the point might come when households pull back, but that it has not arrived yet. Low savings can leave less cushion if income falls or prices rise further.

Corey asks whether credit explains why habits have not changed. He says consumer credit is increasing and households are carrying larger balances, but they are not spending a larger share of income to service that debt. He says that is because incomes are growing, even as the savings rate falls.

He says one chart surprised him: student loan balances have grown a great deal over roughly twenty years, and he wonders aloud whether they amount to a bubble. He adds, with some humor, that he hopes the education was worth it. This recap does not endorse the bubble idea, and it is his opinion. He also notes that auto loans are at their highest level on record and have grown quickly since about 2014, which he would prefer to see lower. Relative to disposable income, he says consumer credit outstanding is not too much of a problem. Higher balances can still become harder to manage if income falls or borrowing costs rise.

Corey says people have not changed their day-to-day spending, and he wonders whether they have changed where they live instead. He points to the share of adults aged 25 to 34 who live with their parents, which he says is meaningfully higher for both men and women than it was around 2007. He says the share for women is at an all-time high on his chart, and for men it is trending higher after a peak during the pandemic.

He connects this to housing affordability, which he says is near its lowest on record. He links that to high home prices, which owners still want to hold, and to mortgage rates that do not seem likely to fall much soon. He says he would guess relief may come on the price side before the mortgage rate side, but that time will tell. He says he is not taking any action on this idea and is only trying to connect the dots. These are his views, and housing prices and rates are hard to predict.

Corey says his final chart shows consumer sentiment near its lowest levels on record. He asks whether that reflects people being stuck at home, being weighed down by student debt, or feeling the cumulative effects of inflation, and says it may be a combination. He then introduces one more idea, which he describes as a theory he cannot verify.

He says that over the past century, courts and regulators often used antitrust actions to break up powerful companies and to protect small and local businesses, and that he understands such actions are far less common today. He says the result has been much more corporate dominance, which has been a great benefit to the stock market. He asks whether that may weigh on consumer confidence, and whether it may have gone too far. He asks viewers whether they would accept more limited stock market gains in exchange for a better quality of life elsewhere, or whether the gains are worth it given how much of the major stock index a few companies make up. He invites viewers to agree or disagree in the comments. This recap takes no position on policy, and the link to sentiment is unproven.

The common thread is that the consumer picture is mixed. A strong job market and steady spending sit next to low savings, growing debt balances, and weak sentiment, and these readings do not all point the same way. Corey's questions are whether households are absorbing higher prices from their savings, whether changes in living arrangements are doing some of the adjusting, and whether concentration in a few very large companies plays a part. None of these questions has a settled answer, and the data can change or be revised.

For most households, the planning questions are closer to home. How large is an emergency reserve, how much of income goes to debt payments, how would spending be funded if income fell, and how much of a portfolio is tied to a small number of large companies? A written plan, a reserve, and diversification may help, though none of them can eliminate the possibility of loss.

This market update is a financial education presentation. It is not personalized investment advice, and it does not recommend buying, selling, or holding any security, company, or strategy. Do your own due diligence before acting on anything you read or hear here. The opinions expressed are Corey's alone, and investing involves risk, including the possible loss of principal. More disclaimer information is available on the Disclosures page.

Broad economic charts are most useful when they prompt better planning questions, such as how much cash you hold for spending, how your debts are structured, and how concentrated your investments are.

Explore the firm's investment planning approach, or contact Ankerstar Wealth to discuss how these themes relate to your own planning questions. Any decision should reflect individual circumstances and a full review of risks, taxes, and trade-offs.