Why US Consumers Keep Spending Amidst Delinquencies

Understanding the Resilience of US Consumption

In the latest episode of Macro Markets, Cointelegraph analyst Marcel Pechman delves into the reasons behind the continued strength of United States consumption, despite rising delinquencies in auto-loan and credit card balances. Pechman suggests that consumers have been able to maintain their spending due to surplus cash savings and temporary relief on student loan repayments.

The Depletion of Excess Savings

However, investment bank JPMorgan reveals that consumers have now exhausted their excess savings accumulated during the pandemic, which at its peak amounted to over $2 trillion. This data contradicts the notion that the stock market should have experienced a significant decline, as predicted by Pechman. Nevertheless, he warns against betting against the S&P 500, citing impending inflation and the government's likely intervention to prevent a recession.

The Risk of a Weaker Yuan

Shifting gears, Pechman explores the recent intervention by the Chinese central bank following the yuan's plunge to a 16-year low against the US dollar. He highlights the inherent risk in doubting China's ability to sustain a stronger currency, suggesting that the reserve holdings of the People's Bank of China may not suffice to maintain the desired level of the yuan. Although there is currently no immediate threat, Pechman advises keeping a close watch on the situation.

Stay Informed with Macro Markets

For further insights into these topics, don't miss the latest episode of Macro Markets, available exclusively on the newly launched Cointelegraph Markets & Research YouTube channel.