Weakening State of the Consumer

Over the past few months, the state of the consumer has been gradually weakening, and the outlook over the next year looks bleak. The Covid-era savings, which were fueled by stimulus checks and holdbacks like student loans, are quickly waning, all while the rate of personal savings for Americans is falling. We believe that the consumer growth the economy experienced over the last year will not be sustainable moving forward. It is estimated that Americans will completely deplete their Covid-era savings by early 2024, at which point we expect consumer spending will take a drastic hit.

Apple weak for another week

Apple stock continues to fall this week. Over the last 2 days, Apple’s stock has fallen over 2.9%, lowering its market value by nearly $190 billion dollars. Investors believe that this is because of China’s ban on government officials using iPhones at work. In addition to that, new market phones have been gaining popularity which doesn’t help Apple’s case. With Apple’s event coming up on September 12th, only time will tell whether or not its stock will continue to decrease, or whether a round of new products will bring new luck to Apple.  

Airbnb added to S&P 500

Airbnb (NASDAQ: ABNB) rose 7.7% on Tuesday, September 5th, after S&P Dow Jones Indices said Friday, September 1st, that they would join the S&P 500 on September 18. Blackstone (BX) will also join the S&P 500. The companies replace Lincoln National (LNC) and Newell Brands (NWL), which in turn will replace uniQure (QURE) and Universal Insurance Holdings (UVE) in the S&P SmallCap 600. ABNB is set to lose about 1% in annual revenue as New York hosts face new regulations that went into effect today and require registration to operate and compliance with several restrictions. Last month, the company beat earnings estimates and set guidance higher than the consensus expectation. ABNB shares are up more than 67% so far this year. 

Labor Market Slowing Down

Surprisingly, job openings decreased by 338,000 in July, reaching their lowest level since March 2001. The number of job layoffs, considered a more reliable labor market indicator, also fell significantly. The non-farm payrolls report for August, released on Friday, suggested a weakening labor market, with employers adding 187,000 jobs, slightly above consensus expectations, although with downward revisions for the previous two months totaling 110,000. Average hourly wages rose just 0.2% for the month, slightly below expectations, and the unemployment rate increased from 3.5% to 3.8%, its highest level since February 2022, as 736,000 individuals re-entered the labor market, which increased the labor force participation rate to 62.8%, its highest since February 2020.