Tough numbers

Yesterday was not a good day for economic data in the U.S. GDP for the first quarter was revised down to 1.6% annualized rate, which doesn’t tell a great growth picture. But the real story is the consumer. Disposable income is falling down, pressured by low real salaries and high inflation. As a consequence, the savings rate is just above the all time low. The middle class is being crushed. You can see that in the charts below. The importance of opening the strait of Hormuz is growing rapidly as days go by. Oil price needs to go down and stay low for some time. Another potential deal between Iran and the U.S. is on the table, but drones and missiles keep flying around the area. It doesn’t look like a ceasefire, at least not a serious one that both parties will respect. We are about to enter the 4th month of a conflict that was originally designed to last a week. Remember the U.S. economy is massively dependent on consumer spending (2/3 of GDP), and consumers are under pressure from high gasoline prices and increasing cost of living. Housing affordability is low, because mortgage rates are high and home prices remain elevated. Market all time highs lost its meaning for consumers a while ago. We need to solve the real economy problem, not the financial economy.

Want to know more? You can register for free at Fund@mental.

#iamfundamental #soyfundamental #wealthmanagement #familyoffice #financialadvisor #financialplanning #policymistake #ratecut #stagflation