The patron is the financial system.

I purchased a espresso this morning for $3.20. Later I’ll be taking my six-year-old to town. We’re going to spend $30 on practice tickets, $50 on the Museum of Pure Historical past, and one other $30 on meals. 

We’re a nation of spenders. 68% of our GDP comes from us opening our wallets.

If you happen to suppose we’re going to have a recession in 2024, you must suppose Individuals are going to curtail their spending.

We heard from CEOs of the largest banks this week as we enter earnings season. What they’re seeing and saying is just not indicative of a shopper that’s something apart from wholesome.

Jamie Dimon of JPMorgan Chase stated “A really sturdy labor market means, all else equal, sturdy shopper credit score. In order that’s how we see the world.”

Brian Moynihan, the CEO of Financial institution of America had related issues to say. Earlier than we get to that, shameless investor plug. I hear to those earnings calls on Quartr. If you happen to’re an analyst who follows corporations, I can’t suggest this extremely sufficient. Reside transcripts and slides multi function place. And that’s simply scratching the floor of what they will do. 

Here’s a screenshot from the Financial institution of America Name

Moynihan stated:

“If you happen to suppose again, as we ended 2022 and entered 2023, the good debate was how a lot the pandemic surge in deposits would dissipate. However look — trying right now, we ended 2023 with $1.924 trillion of deposits, solely $7 billion lower than we had at year-end ’22 and 4% larger than the trough in Could of this 12 months. The full deposit — the full common deposits within the fourth quarter remained 35% larger than they did within the fourth quarter of 2019.”

Whole spending from BofA clients was $4.1 trillion in 2023, 4% larger than it was in 2022, and 35% larger than it was in 2019, the complete 12 months earlier than the pandemic.

We’re spending our butts off, however we’re not overextending ourselves. Right here’s Moynihan once more:

“They’re utilizing their credit score responsibly, a lot is made of upper bank card balances, however on the scale of the financial system and the scale — persons are forgetting that financial system is rather a lot larger than it was in ’19 due to the inflation and every part. And as a proportion, we don’t see any stress there. We see a normalization of that credit score. So that they’re working, they’re getting paid. They’ve balances in accounts. They’ve entry to credit score. They’ve locked in good charges on their mortgages they usually’re employed. It’s — we really feel it’s good. So we expect the tender touchdown is a core thesis and our inner information helps what our analysis crew sees.” 

Individuals are going to proceed to spend as they’ve been so long as they’ve the revenue to help it. And the financial system goes to be positive so long as individuals proceed to spend.

This needs to be supportive of a good inventory market. It doesn’t imply we received’t have corrections. We are going to. It doesn’t imply we will’t get a bear market. We are able to. However so long as the financial system is buzzing, threat belongings ought to do positive.