The latest data and indicators issued in the United States launched strong warnings about the durability of the American consumer, which is the backbone of economic growth in the United States.
In light of the high prices and the return of strict customs policies during the era of President Donald Trump, clear signs began to appear on an increasing financial stumbling among American consumers.
An unprecedented rise in credit stumbling
During the results of the first quarter, the JP Morgan Group announced that the percentage of faltering and unparalleled loans in the credit card sector has reached its highest level in 13 years. The newspaper pointed out that the rate of “deletion” – a measure of the volume of loans that are officially losing – has now exceeded the rates registered before the Korona pandemic, and this ends a long period of strong credit performance of consumers during the broad government support period.
In the same context, the Federal Reserve in Philadelphia stated that the percentage of credit card holders who pay only the minimum required payments has reached its highest level in 12 years. A rise in delay rates was also recorded for a period of 30, 60 and 90 days, in parallel with the arrival of the debt of renewable cards to a new record.
The federal reserve wrote in his report: “These trends are combined, in addition to the high cards balances, clearly indicating the increase in pressure on the American consumer.”
Anxiety about the impact of the new customs duties
These developments are associated with the return of comprehensive customs duties imposed by the Trump administration, which includes a 10% tax on most imports, in addition to fees of 145% on goods imported from China.
It seems that the American consumer began to prepare for the influence of these decisions, through “temporary acceleration of spending” as Jeremy Barnum, Financial Director of Ji Morgan, described in an interview with the Financial Times newspaper, saying: “April data shows something of pre -emptive spending, especially on the goods that are expected to rise due to customs duties.”
According to a preliminary survey published by the University of Michigan, consumer confidence has witnessed a sharp decline since December, amid the escalation of concerns about the developments of the trade war. The percentage of Americans who expect unemployment increased over the next year to its highest level since 2009.
Changes in daily consumer behavior
Shopping movement data gathered by “Plaser Dot AI” company, which is based on mobile phones signals, showed an increase in the demand for discounts and wholesale chains in the last week of March, which is an indication that consumers started storing goods before prices rose.
In this context, John David Rene, the financial manager of Walmart, told the newspaper: “We have noticed a kind of increased volatility in sales, from one week to week, and even from day to day, and is linked to a decrease in consumer confidence,” said John David Rene, the financial manager of Walmart.
Despite these challenges, Walmart kept her expected for local sales growth by 3% and 4% for the quarter ending in April.
Division of banking assessments
Despite the warnings, Barnum from JB Morgan indicated that “the American consumer is still in an acceptable position,” but he admitted that low -income groups have become more vulnerable, due to their poor cash reserves.
For his part, Mike Santomassimo, financial manager of “Wales Vargo”, said that customers still show steadfastness, noting that spending on credit cards and discount remained stable. Note that Wales Vargo has a cards younger than JB Morgan, which may explain some contrast in the numbers.
As for Jimmy Daymon, CEO of Ji Morgan, he commented: “The real pillar on the subject of faltering loans is the rate of unemployment … Credit indicators usually move in parallel with the change of employment rate.”
Does the American economy face the danger of stagnation?
With the economy entering a stage of uncertainty, Diam affirmed that the possibilities are open, suggesting that the chances of entering stagnation during the next 12 months are 50%, a reading that reflects the real anxiety within the major financial institutions.
While pressures continue to rise, the final answer may be linked to whether American families are able to bear the new price wave, and to what extent will high customs duties affect basic consumption patterns.
Currently, it appears that the political and financial transformations in Washington began to leave their direct mark on people’s behavior on the street. Can the American economy absorb the shock? Or is the “American Consumer Power” that has always formed the pillar of growth, has already started to decline?
