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Giving thanks for consumers, the engine of the rebound: Morning Brief
Javier E. David · Editor focused on markets and the economy
6 min read

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This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Wednesday, November 24, 2021

US should be most thankful for free-spending consumers

In the interest of expressing gratitude on the Thanksgiving holiday, I’d like to take the opportunity to address a specific criticism leveled at the Morning Brief by one of our loyal readers, who recently wrote to say our newsletter has become “full of too much doom and gloom.”

It should be stated unequivocally that the Morning Brief makes no apologies for calling it as we see it, without biases or sugar-coating. The world is an increasingly complicated and messy place. And it goes without saying that the onset of, and recovery from, COVID-19 has created ongoing strains for businesses, governments, and especially consumers who are personally feeling the pinch of skyrocketing prices.

Having said that, it’s also true that there are also many reasons to give thanks. There are more jobs than people to fill them, the holiday shopping season is shaping up to be less gloomy than expected, and stock markets are perched near record highs — which, among other things, translates into retirement accounts that are in solid shape.

In fact, we should be most grateful for a V-shaped recovery from 2020’s lockdowns that’s been nothing short of extraordinary. For that, we should all give thanks for a factor that former Morning Brief scribe (and currently editor of TKer) Sam Ro rightfully called: the unflappable U.S. consumer.

In a Yahoo Finance appearance last week, Ro was spot on when he suggested that pent-up demand from 2020’s lockdowns — when the virus dissuaded people from traveling, buying, dining out, and threw millions of them on to the unemployment line — is playing a really big role in keeping the economy afloat in 2021.

JPMorgan Chase recently estimated that COVID-19 related restrictions created a staggering $2.5 trillion in savings that would not have occurred otherwise. Much of that pocketed wealth and deferred demand are showing up in spades now, as consumers continue to open their wallets, even as skyrocketing prices eat into their purchasing power.

“It’s fascinating to note that while the supply chain disruptions we’re experiencing are clearly a global phenomenon, the U.S. stands out in how dramatically both longer delivery times and higher prices are affecting the economy,” BlackRock said in a recent research note.

“That is likely driven in part by the fact that the U.S. committed to extraordinary stimulus during (and after) the acute phase of the crisis, which bolstered savings, household wealth and ultimately an extraordinary demand for goods.”

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