According to CNBC, the consumer desire to spend money in the reopening economy is not reflected in the data observed by the Federal Reserve and Wall Street.
They don't care about higher rates. Cramer said that they had savings because they did nothing for two years. My biggest worry is that the aggregate data can't capture the nature of this one-time only euphoria. The PCE price index or consumer spending for August went up by 0.3% compared to July, according to BEA statistics. Prices for goods decreased by 0.3% and prices for services increased by 0.6%.
Inflation: Inflation has not subsided despite back-to-back aggressive rate hikes by the U.S. Fed. The central bank has been supportive in their call for continued fighting against inflation and this has taken an immense toll on both the stock and bond markets as well as emerging market currencies.
Since the beginning of 2022, the SPDR S&P 500 ETF Trust SPY has lost more than 21% of its value, while the Vanguard Total Bond Market Index Fund ETF BND has shed over 15% in the same period.
At the same time, oil prices have gone up due to OPEC s decision to trim its output by more than 2 million barrels day. The time when consumers start to assume importance is when this is the time when they start to spend their money.
Cramer said that consumers need to spend slowly, although it might not happen soon. There is a chance that there won't be a euphoria a year from now. They will have spent their excess savings. He said that's when interest rates will likely be at their maximum.
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