"But consumers – not all but enough to move the needle – are sitting on cash, stock and crypto gains, (still, but declining), and they’re sitting on the cash they extracted from their homes last year via cash-out refi's while mortgage rates were low, and they’ve got room on their credit cards, and they’re spending this money. And spending, adjusted for inflation, rose again."
I've been wondering why rates have remained range bound while everything else seems to be up a lot. It looks as if there is still some spending power remaining in the American consumer and they've also managed to improve incomes as well on average. That still has traction but in a different direction now, services are doing better than goods for the first time in a while:
"But Americans are shifting away from buying goods to buying services again. The pandemic-era goods-buying binge that exploded the trade deficit and contributed to all kinds of shortages is slowly losing oomph, and spending on goods fell. But spending on services rose faster, and overall spending inched up."
This means things could possibly be getting better for theme parks, tourism (no more masks on planes, yay!) and possibly even the beleaguered entertainment industry as consumers make up for the couple of years. That will be inflationary of course but what isn't these days??
"It boils down to this: Total personal income from all sources have increased nicely, but all those increases plus some have been getting eaten up since last summer by raging inflation, and this happened again in March, when “real” income continued to decline. That’s the thievery of inflation."
Consumers' incomes matter. They affect everything downstream in terms of where the money goes and having a clue where they're headed is good information for most businesses to know.
Demand for capital here in the private lending industry is robust and, as a lender I'm always acutely tuned into the reasons why merchants seek funding. That is, what they're using the proceeds for in their businesses. Right now, bridge funding is the most common as companies struggle to pay current vendors many of who demand stricter terms because they themselves are getting slammed by shippers. Also, Inventories are higher than normal since the last 14 months everyone has "loaded the boat" on parts and materials cutting into their reserves.
Now cash-flow is tight but thankfully the rates haven't gone up at all, in fact in some tiers they're actually lower! This is unusual while there's this much inflation to say the least! It won't last though, if I had to guess there will be significant increases in the cost of capital in the future.
Call me to lock in a fixed rate on unsecured capital you can use for any business expense.