July 14, 2024

BIG DROP in Consumer Spending

Bank of America has reported a huge slowdown in consumer spending in the USA.

Which is a major 2023 recession warning. This suggests that we could see job losses spike in future months with home prices and stock prices declining.

BIG DROP in Consumer Spending

BIG DROP in Consumer Spending -American Savings - Green Home Improvements Federal Reserve Hikes Interest Rates

Consumer spending on Bank of America credit/debit cards declined most in Furniture, Home Improvement, and Luxury Goods. While spending still rose for restaurants. Overall, spending was down -1.2% YoY from last April.

Declining consumer spending is a big problem for the US Economy because 70% of GDP comes from spending. So it means our economy is decline. Also, it is likely that businesses will continue to lay off workers in 2023.

Another company that had a concerning report was Airbnb. Their stock price is down by 15% in the last week because they had a “muted” outlook for travel demand in the rest of 2023. A slowdown in Airbnb bookings would mean that certain housing markets might have issues.

The markets with the biggest drops in occupancy include Miami, Philadelphia, Fort Lauderdale, Austin, San Antonio, and Cape Coral.

Below are a five cities already feeling the effects of the housing decline:

DALLAS, TX: inventory in the Dallas Housing Market has tripled over the last year. While the sky-high property taxes are keeping many would-be homebuyers locked out of the market. I expect DFW home prices to decline by 20-30% over the next several years.

SAN FRANCISCO, CA: home prices in the Bay Area Housing Market are already down 15% YoY. And they could decline further in coming months due to the collapse of the tech sector. Companies such as Meta, Google, and DocuSign are doing big layoffs.

PHOENIX, AZ: Phoenix is a very boom/bust Housing Market. And the bust has started. Prices are already down 10% from peak and could decline another 25% based on how overvalued the prices still are today. Especially at Mortgage Rates north of 6%.

LAS VEGAS, NV: Las Vegas is an economy and housing market based off tourism and and investor demand. Not a great combination for an imminent recession. These risk factors have already caused inventory in Las Vegas to explode while prices are already down 10%. They could go down another 25%.

AUSTIN, TX: what a reversal of fortunes. Just a year ago Austin’s Housing Market was deemed as “untouchable” and the fastest growing in America. Now it’s mired in the first year of what will likely be a multi-year housing downturn that sees prices decline by as much as 40% in total. High property taxes, layoffs, lots of homebuilding – Austin has all the headwinds one would expect for a crashing Housing Market.

BIG DROP in Consumer Spending

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