Bottoms Up! Early Signs of Economic Recovery
Nov 11, 2024As 2024 prepares for its curtain call, let’s dive into the economic narrative that has unfolded over the year. With an array of economic indicators juggling between highs and lows, we’re here to decode what this means for your wallet, your home, and yes, even your holiday plans.
- Shit like hurricanes and strikes happen. But, despite a few curveballs, the economy's still batting strong with solid EPS growth, beefy personal income stats, and a nice uptick in consumer spending. It's not all doom and gloom when the numbers stay perky.
- Buzzword of the season: "cyclical bottom." It’s not just any corporate jargon; it's a beacon of hope. When companies chatter about hitting the "bottom," it's their way of whispering, "Hey, we think the worst is behind us, and it's only up from here!"
- As the world turns digital, shoppers are skipping the lines and hitting 'Add to Cart' more than ever, nudged by the twin motivators of modern convenience and the ever-creeping cost of living.
- Yes, wallets are opening, but eyes are squinting at the price tags. Big-ticket buys are on the downswing as consumers smartly navigate through the thick fog of economic uncertainty.
- The job market's on a bit of a snooze, and with election season stirring the pot, the Fed might just get frisky with interest rates to give the economy a little wake-up nudge.
Of Hurricanes and Consumer Behaviours
Are your bank statements showing up more red than green? This time, you get to blame it on Labor Day's early arrival and those elusive weekends that seem shorter than a New York minute. But, in spite of this, month-over-month data tells a happier tale with a 0.6% rise in spending, seasonally adjusted to make economists' hearts flutter.
When Hurricane Helene swept through Florida, it unleashed more than just chaos—it disrupted daily life and transformed consumer behaviors overnight. As the storm approached, residents rushed to stockpile essentials, filling their carts with canned goods and bottled water in a classic emergency control protocol. This surge in purchases was a textbook response to impending disaster, highlighting how quickly consumer priorities can shift in crisis situations. Once Helene passed, there was a noticeable rebound in spending, as normalcy began to restore and consumers returned to their regular shopping habits, underscoring the resilience and adaptability of the market in post-disaster recovery phases.
💡 The aftermath of Hurricane Helene serves as a stark reminder of the profound impact that unexpected events can have on economic rhythms. It's a testament to the adaptability of consumers and businesses alike, who can pivot and persevere through challenges. As we reflect on these fluctuations, it becomes clear that resilience isn’t just about bouncing back; it’s about bouncing forward, often with renewed priorities and a sharper focus on preparedness for whatever may come next.
Economy Doing Good After All, Strong Consumer Confidence
If anyone is hinting at a looming recession, take it with a grain of salt—actually, we think they’re outright fibbing. The latest Bank of America reports show a promising uptrend in earnings per share (EPS), adjusting market expectations towards a more optimistic future. Many companies are not just hitting their targets but slightly outperforming, setting the stage for a hopeful outlook next year. Of course, there are always exceptions like Boeing, which never fails to stir the pot with its own corporate twists, reminding us that the corporate world is never without its drama.
A notable topic this earnings season is the increased mention of "bottom" in calls—a whopping 56% more than last year. This isn’t just a coincidental corporate lingo; it symbolizes a turning point. When executives talk about reaching the "bottom," they’re hinting that they believe the worst is over and brighter days lie ahead. Think of it as a wheel, right now, sure, we're rolling along at the lowest point, but what goes down, must come up. Fingers crossed!
The response from the market to these positive earnings surprises has been euphoric. Companies that exceed Wall Street forecasts are seeing their stock prices not just rise but soar, receiving more than just a pat on the back—they’re getting a roaring standing ovation. This enthusiastic reaction highlights the market’s readiness to reward those navigating these turbulent times successfully.
While we’re on the page of all things good, the housing market too is showing signs of resilience with an uptick in home sales, potentially indicating the early stages of recovery. Meanwhile, the Consumer Price Index (CPI) has seen only a modest increase year-over-year, suggesting that inflation is still under control and supportive of consumer spending power. The broader U.S. economy continues to exceed expectations, with third-quarter GDP growth impressively robust at a 2.8% quarter-over-quarter seasonally adjusted annual rate, buoyed by strong domestic demand.
These positive economic indicators suggest that the Federal Reserve's monetary policy might remain accommodative, encouraging further economic activity. Consumer confidence is also on the rise, likely buoyed by stabilizing personal debt levels and manageable interest payments, contributing positively to the economic momentum.
💡 Resilience and adaptability have been the economic themes of the year. Companies and consumers alike have shown remarkable tenacity in the face of adversity, and as we edge closer to 2025, that resilience is poised to set the stage for what could be a year of recovery and renewed growth. The buzz around the "bottom" being reached may have stirred mixed emotions, but it also sparked a collective hope for an upward trajectory. After all, if this year has taught us anything, it's that the economic landscape is always changing, one day it’s all highs, another its all lows.
Consumer Spending? Never Better
Okay we might be slightly exaggerating, but really, consumer spending is looking up. Doing much better than a few months ago, at the very least.
And look, with winter setting in, the internet is our new best friend for holiday shopping—from the warmth and comfort of our couches. Economic jitters? Absolutely. But it’s nothing a good online sale can’t fix. Brace yourself for a spike in online sales, fueled by year-end deals, the nippy air, and the festive gift-hunting season—it's only upwards from here!
Of course, naturally, there's a dip in sectors like athleisure, gym gear, and travel plans—winter's icy grip makes hibernation more appealing than a jog in the park.
Seasonal declines in sectors such as athleisure and travel are expected this time of year. Why the slowdown? Simply put, winter is upon us, which naturally discourages outdoor exercises and travel. Interestingly, as fewer people shop for athletic apparel, there's a noticeable shift towards investing in home fitness equipment. It appears that while outdoor activities wane, many are preparing to maintain their fitness regimes from the warmth and convenience of their homes. Aah, the beauty of New Year’s resolutions. (We know its you, Ozempic!)
But here's what we (and most likely everybody else) think, things will rebound next year. We’ll keep an eye out for the January Effect, which, if history repeats itself, is likely to bring a fresh surge of activity in more sectors than one.
💡 While the cold may slow some activities, it certainly heats up others. As consumers cozy up indoors, online shopping carts fill up, driven by the allure of holiday deals. This pivot to virtual storefronts, while seasonal dips affect travel and outdoor gear, just shows how adaptable our spending habits are—reshaping not just when and how we buy, but what we buy based on the rhythm of the seasons.
This pattern, cyclical yet very much adaptive, underscores a broader truth about consumer behavior: it's resilient and responsive. So, as the winter chill sets in and the market recalibrates, we’ll be watching to see how these trends thaw into spring. Will the January Effect kickstart a resurgence in travel and outdoor activities? Time will tell, but one thing’s for sure—the consumer heartbeat remains strong, pulsing with each seasonal shift.
High Cost of Living, But Adaptation is Key
Right now, the thoughts of long-term investments can feel a bit like walking a tightrope—daunting, to say the least. This nervousness means one thing above many: the cost of living remains stubbornly high, yet, interestingly, people are still spending money. Proof? While grocery spending has modestly declined, there's a noticeable uptick in meal delivery services. Which just means that people are still willing to pay for convenience. Be frank, who wants to buy expensive groceries and break their backs to cook when you can just tap an app to have dinner delivered to your door? Certainly not us.
Meanwhile, there's been a significant pullback in the purchasing of major items like cars and appliances, a trend that's been holding steady since May 2024. While consumers note that inflation in everyday essentials like food and dining seems less severe than last year, the reality is that prices are still high. Sticky, sticky. This suggests a grudging acceptance, a kind of adaptation to the 'new normal' of higher living costs. These shifts in spending and perception highlight a consumer base that is both cautious and increasingly resourceful in managing their economic realities. Keyword here: adapting.
Another proof that people are finding ways to adapt to the high cost of living, is the rise of people wanting to buy new homes. Looks like owning a home might be more cool—and perhaps more economical—than renting. Despite the financial constraints, the rebound in home buying indicates a preference for the stability and potential long-term benefits of owning over renting.
Right now, spending on travel is taking a back seat. Data suggests a seasonal slowdown as we transition from the warm buzz of October into the chillier months, which traditionally see a dip in travel, particularly in areas where winter bites hard.
Interestingly, it seems the wanderlust has been traded for a more domestic bliss. Instead of globe-trotting, more folks are channeling their funds into buying homes—turning the travel bug into a homebody vibe. It's less about boarding flights and more about nesting, as staying in becomes the new going out.
But keep your travel gear handy, because things are looking up for next year. The dark cloud of recession is lifting, and with it, the prospects for hitting the road (or the skies) are brightening. Forget about a downturn; it's time to start planning those missed vacations.
💡 Consumers are redefining what it means to live well in an era of high costs, finding clever ways to maintain comfort without compromising on quality. From tapping into tech for meal deliveries to reshaping the American dream with a shift towards homeownership. If one thing is for sure, is that Americans are resilient. The key to thriving isn't just in surviving the present but in reimagining what our 'normal' looks like. Here’s to the ingenious twists and turns of consumer behavior that keep the market on its toes!
Ups and Downs of the Job Market
Now that we’ve covered the good news, let’s talk about what might ring some bells. Looks like th job market lately could really use a pep talk. It’s been taking a hit from all sides, with natural disasters and strikes leading the charge. Non-farm payrolls are down, the unemployment rate has edged up slightly, and the chatter now is all about what the Fed might do next. Could rate cuts be on the menu? Perhaps.
While there is still growth, it's shaky at best. To put it plainly, we've definitely had worse days in unemployment. Recent revisions show that previous job growth figures might have worn rose-colored glasses, suggesting an overly optimistic view at first glance. The real picture shows that job growth has been weaker than expected, largely influenced by external pressures like hurricanes disrupting businesses and strikes freezing operations in key industries. This has resulted in fewer jobs being created, painting a slow and somewhat grim picture of the current state of employment.
Despite these challenges, not all indicators are gloomy. Disposable Personal Income (DPI) per capita has seen growth, and while the unemployment numbers aren't exactly cheery, average hourly earnings have experienced a slight increase. This is a silver lining that suggests consumers might still flex some financial muscle.
Yet, caution persists in the air. Businesses could be holding back on hiring, bracing for potential shifts in economic policies or interest rates adjustments from the government or Federal Reserve. It's a tricky cycle—businesses wait for the Fed to make a move, while the Fed eyes the job market’s pulse before turning the policy knobs.
💡 This ongoing scenario results in a temporary weakening of job growth as various sectors grapple with immediate challenges and uncertainties. The economic cycle of expansion and contraction continues to play out, and currently, we’re in a phase of contraction. But hope isn't lost; there’s talk of potential uplift once we weather this storm.
Looking ahead, there’s a shared optimism that things might pick up next year, especially once we move past this "bottom" phase in the economic cycle. If history teaches us anything, it's that after every downturn, there’s an upturn waiting to happen. Here’s to hoping that the job market finds its footing soon and sails into smoother waters.
What’s in the Cards?
As we bid adieu to 2024, everyone's buzzing about what the future holds, particularly regarding our financial prospects. While the rising earnings per share (EPS) figures offer a gleam of optimism, it's crucial to temper our enthusiasm with a healthy dose of reality. Sure, the companies are outdoing themselves, which might suggest pink slips are a thing of the past.
This positive trend in corporate earnings hints that perhaps we're on the cusp of economic stability. Companies exceeding financial forecasts suggest a resilience that could mean good news for job markets and investment portfolios in the near future.
Sourced from MacroMicro
Look, we’ve definitely been through tougher times, and right now, recession is not in the itinerary. In fact, we’re looking at a brighter year ahead.
Here’s hoping, because while these numbers are promising, they are not foolproof predictors of personal financial success. Economic winds shift rapidly, and today’s gains could easily turn into tomorrow’s losses. Markets, much like moods, can swing unpredictably.