US Households Have Depleted Their Pandemic Savings: Study Highlights Risk Of Economic Downturn
Portfolio Pulse from Piero Cingari
A Federal Reserve study suggests that US households are rapidly depleting their pandemic savings, which could lead to an economic downturn. The liquid assets of the lower 80% of households have dipped below their March 2020 levels. The wealthiest 20% still maintain cash savings at roughly 8% above pre-pandemic levels, while the bottom 40% have seen an 8% decline. This decrease in spending power could slow down economic growth, particularly impacting sectors that rely heavily on discretionary spending, such as the Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) and the Communication Services Select Sector SPDR Fund (NYSE:XLC).
September 25, 2023 | 9:21 pm
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NEGATIVE IMPACT
The SPDR S&P 500 ETF Trust (NYSE:SPY) has risen 13% year to date, but in September it has so far fallen by 4.4%, its worst month of the year. The depletion of pandemic savings could further impact the ETF.
The depletion of pandemic savings among US households could lead to a decrease in consumer spending, which could negatively impact the overall stock market and ETFs like SPY.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The Communication Services Select Sector SPDR Fund (NYSE:XLC) could be negatively impacted by the decrease in consumer spending power due to the depletion of pandemic savings.
The decrease in consumer spending power could slow down economic growth, particularly impacting sectors that rely heavily on discretionary spending, such as XLC.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 90
NEGATIVE IMPACT
The Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) could be negatively impacted by the decrease in consumer spending power due to the depletion of pandemic savings.
The decrease in consumer spending power could slow down economic growth, particularly impacting sectors that rely heavily on discretionary spending, such as XLY.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 90