Thread by @42macroDDale

COACHING THREAD: In response to the @NickTimiraos article I tweeted, I've had no less than two dozen retail investors tweet at me some version of the following:

"High credit card debt = the household sector balance sheet is not healthy nor is consumer spending resilient".

1/

https://twitter.com/kajd17/status/1587106710090665985

Ignoring the very obvious fact that anchoring on a NON-STATIONARY TIME SERIES like nominal credit card debt should not ever ever ever be used to form the basis of CYCLICAL (read: stationary) determinations, the reason high credit card debt it misses the mark is threefold... 2/

1. The US household sector is FLUSH with checkable Cash on both an absolute ($7.6tn), share-of-total-assets (5%), and share-of-disposable-personal-income (41%) basis.
2. Household debt is low, at only 88% of nominal disposable personal income (vs. 115% pre-GFC)... 3/

3. At +2.0% on a 3-month annualized basis, consumer spending is still growing decently on a REAL basis -- i.e., AFTER subtracting a ~40yr high in inflation. +2.0% compares to a pre-COVID trend of +2.5%... 4/

All told, be careful not to succumb to the bad "analysis" of🐻 porn peddlers that NEED the US economy to fall off a cliff in short order to justify their reckless "wen Lambo?" #BTFD behavior. This segment of uninformed volume NEEDS the economy to suck so the Fed pivots soon... 5/

"What happens if the US economy does NOT fall off a cliff soon?" is the #1 question you should be asking yourself as an investor today.

I am grateful @NickTimiraos shined a light on this critical aspect of the Macro debate in his excellent article. 6/6

https://twitter.com/NickTimiraos/status/1586675118759100418?s=20&t=-lPyCfImwvzVk04BL26QbQ