FREE NEWSLETTER
AS INFLATION continues to run hot, wage gains for the bottom quartile of income earners are almost keeping pace with consumer prices. Meanwhile, checking account balances for this group remain more than 50% above pre-pandemic levels.
Is everything A-okay? Of course not. Still, I’d argue that many Americans have positioned themselves well to weather an economic downturn. Another sign: Average credit scores are much improved from, say, the mid-2000s, when families were loading up on debt and speculators were snatching up houses only to flip them months later.
According to Bank of America’s third-quarter earnings report released last week, the average FICO score among the firm’s credit card customers was a solid 770. That’s a smidgen higher than was reported in the same quarter a year ago.
Another bright spot for everyday Americans: Natural gas prices have plummeted. After surging to almost $10 per MMBtu during the summer, the spot price for U.S. Henry Hub natural gas is back under $5. That’s the lowest level since March. Families might not face home heating bills this winter that are as steep as some forecasters had feared earlier this year. Meanwhile, utility bills across the pond should also be less severe now that European natural gas prices are down 67% from their 2022 peak.
But there is, of course, also bad news. Mortgage rates have surged to their highest level in nearly 22 years, with new 30-year loans now above 7%. It’s hard to fathom how the housing market avoids a collapse in monthly transactions. Between steep lending rates and still sky-high real estate prices, prospective borrowers face huge costs, while homeowners who secured a low mortgage rate will likely sit tight for as long as possible.
These are strange times for consumers. But with strong household balance sheets and the job market continuing to hum along, most families should come through these tough times in decent shape.
While I agree that the housing market is understandably in the midst of a major downturn, I can’t help but recall that we took out a 7.125% ARM in 1999 during a time when prices were rising rapidly and bidding wars were common.
I am hoping the multi-decade run of low inflation we had from increased globalization isn’t now going to be high for a long time as globalization is reversing itself.
It’s nice to see facts instead of election time rhetoric.
And whose facts should we believe…our government and/or the mass media…I suspect neither.
Biden recently stated the economy is “strong as hell” presumably based on facts provided by his experts.
As you know there is no such thing as two sets of facts on the same subject. I would be suspect of info based only on surveys which after reading the headline sometimes turns out to be the case.
It is well known that facts can be used selectively to support opposing conclusions.
How to Lie with Statistics by Darrell Huff https://en.wikipedia.org/wiki/How_to_Lie_with_Statistics#:~:text=How%20to%20Lie%20with%20Statistics%20is%20a%20book%20written%20by,to%22%20articles%20as%20a%20freelancer.
“there is no such thing as two sets of facts on the same subject”?
Are you serious?
“Facts”, even many “facts” do not necessarily mean truth.
Mike Zaccardi is optimistic about the economy. He has listed reasons for his optimism. It’s an opinion piece.
We’ll see how his optimism about heating bills turn out for consumers in New England and Europe this winter.