What is the current state of the U.S. economy? A few pictures illustrate the situation

Ava Quinn wrote a column · Dec 27, 2023 10:51

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Conclusion: The economy is in a virtuous cycle

1.Households have strong and secure balance sheets, rising interest rates have not impacted households, home values have accelerated, wages remain high, and consumers have accumulated record amounts of cash and remain resilient.

What is the current state of the U.S. economy? A few pictures illustrate the situation

2.The real estate market remains tight, with vacancy rates at historically low levels. Barring a major shock to the economy, house prices are unlikely to fall significantly.

3.Wages are high and the number of workers is small.

The Employment Cost Index (ECI), which measures total compensation, rose 13.5% in 2020, the fastest increase since 1992. Real wage growth has been positive and consumers have kept the economy resilient. And with the labor force participation rate still well below the average of the past decade, employment costs are unlikely to fall.

4.Consumers still have $950 billion in excess savings, and household savings are growing at an annual rate of 8.5%, the highest level in nearly 30 years. Household liquid assets surged by $5 trillion in 2020 and currently stand at $18 trillion.

5.The company remains relatively cash-rich. Free cash flow for S&P 500 companies has yet to correct to pre-pandemic trends. $100 billion above historical trends.

6.Corporate cash reserves have rebounded to $7 trillion, exceeding interest payments. Interest coverage ratios for U.S. high-yield debt companies remain +1 standard deviation above average.

$S&P 500 Index (.SPX.US)$ $E-mini NASDAQ 100 Futures(MAR5) (NQmain.US)$ $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ $Apple (AAPL.US)$ $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Amazon (AMZN.US)$ $Microsoft (MSFT.US)$ $Netflix (NFLX.US)$ $Vornado Realty Trust (VNO.US)$ $Arbor Realty Trust Inc (ABR.US)$ $SPDR S&P 500 ETF (SPY.US)$ $Invesco QQQ Trust (QQQ.US)$ $iShares Russell 2000 ETF (IWM.US)$

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Revelation 6 : With companies and households full with cash you would think that retail demand would be high causing manufacturing output to rise driving inflation upwards. Specially because we are in the highest retail demand period of the year. I don’t think we can trust those that are giving us good news in regards to this subject.

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iamiam : let's see how fast those numbers correct down. every set of data has been revised down. check back in Q2. the market is NOT the economy.

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