Softened Conditions

Consumers have largely spent through the excess savings accumulated during COVID

Summary: It was another heavy week of earnings calls last week and the economy seems to be continuing to soften. Visa and Mastercard didn’t see a significant change in consumer behavior but in most pockets of the economy, the commentary is muted compared to previous weeks. The consumer’s excess savings from Covid may be running low and higher rates are having a real impact on larger ticket items.

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Editor’s Note: Since it’s earnings season, this week’s newsletter will only be available to premium subscribers. The industry sections include some positive catalysts for tech companies and a big red flag for electric vehicle demand

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Macro

Economic conditions are softening

"Economic conditions softened across several TransUnion markets in the third quarter, most notably in the U.S. and the U.K. While U.S. consumers continue to benefit from low unemployment and modest real wage growth, lingering inflation and rising borrowing costs have taken a toll on household finances. Spending has slowed and consumers have largely spent through the excess savings accumulated during COVID. Although demand for credit remains strong despite elevated costs, banks have tightened lending standards due to weakening consumer finances and increasing capital constraints. Recent commentary from lenders supports these observations, noting that cracks have appeared across consumer lending, especially in the lower credit tiers." - TransUnion (TRU 0.00%↑) CEO Christopher Cartwright