Texas Capital Bank Client Support will be closed for Presidents Day on Monday, February 19, 2024. We will be back to our normal 8:00 AM to 6:00 PM support hours on Tuesday, February 20, 2024.

An enhancement has been scheduled for Account Opening on Saturday, April 20th, starting at 8:00 AM to approximately 2:00 PM CT. During this time, Account Opening may not be available or may have reduced functionality.

More than a game show — Week of April 1, 2024


The consumer is the driver

 Essential Economics

 — Mark Frears


Survey says

So, how are you feeling? Can you be more specific? Emotionally, physically, spiritually or financially? It has to be a thankless job getting people to respond. Keeping it short and providing incentives would be best for me. Do you remember the note passed in class, asking you if you liked someone? Check yes or no! That was a very telling survey.

In the land where the predicted recession has not shown up, inquiring minds want to know what the economic engine, the consumer, is thinking. What will they do next?

Conference Board

First out last week was the Conference Board’s survey of consumers’ current state and expectations. As you see below, both of these are treading water, struggling for direction.

line graphs: U.S. Consumer Confidence (Conf Bd) March; present situation vs expectations
Source: Piper Sandler

As you may recall, the Consumer Confidence Index is more influenced by employment and labor market conditions. Given the low unemployment rate, and apparently plentiful job opportunities, you would expect the expectations to be higher.

The other potential weakness seen in this release is the historically deeply negative spread between the expectations and present situation. This has signaled recession in the past, and, given this is the 35th straight month with a gap greater than 30 points, we would expect a recession in 1 to 3 years. 

U of M

As I grew up in East Lansing, I don’t put much credence in anything that comes out of Ann Arbor, but we will take a look at the other major confidence survey. In the chart below, you can see this measure has been on an improving trend since hitting a bottom in June 2022.

line graphs: US Consumer sentiment; present conditions vs consumer expectations vs consumer sentiment

    Source: Oxford Economics/Haver Analytics

The Michigan sentiment index has a greater emphasis on household finances and the impact of inflation. Given the stalled progress on the inflation fight, we may see this upward trend stall out.

Personal Consumption Expenditure (PCE) is the Fed’s inflation measure of choice, and the release this week showed no significant improvement, but also no warning uptick. As seen below, the year-over-year metrics are still running above the 2% Fed target.

line graphs: US PCE deflator; core vs headline

Source: Oxford Economics/Haver Analytics

A secondary measure of confidence put out by Gallup also shows we are not fully believing the strength of the economy. As you see below, we are still not back up to the post-pandemic highs.

line graph- Economic Confidence Index; January 2020- March 2024. Description of index: The Gallup Economic Confidence Index summarizes Americans' assessments of current economic conditions (% excellent of good minus % poor) and economic outlook (% getting better minus % getting worse). It has a theoretical range of -100 to +100.

    Source: Gallup

Digging deeper

Personal income is hanging in there, and jobless claims continue to be low. As a job is one of the most important factors in people feeling comfortable with spending, why are people not confident?

There are many moving parts here, but let’s take a look at a few. First, how is inflation impacting low-income households? As you see below, they spend more than 59% on essentials such as food and housing.

pie graphs- 1) how Do Low-Income Households spend their money? 2) How do High-income households spend their money?

 Source: BLS Consumer Expentiture Survey

However, high-income households only spend 40% on these two categories. This allows them more disposable income for non-essentials.

Second, in order for many households to continue to spend, they are relying on debt. The chart below shows the increasing burden of interest payments. 

line graph- Interest Payments by US Households; seasonally adjusted annual rate. Source: Bureau of Economic Analysis

Third, while we have been experiencing lower prices at the pump, this bottomed out earlier this year, and as you see below, has been on the rise. Most everyone has a car to fill up, and this can weigh on your confidence if you see consistently higher numbers costs here.

line graph- Daily National Average Gasoline Prices Regular Unleaded. As surveyed by the AAA Motor Club

Source: Bloomberg American Automobile Association (AAA)

Finally, the increasingly polarized political environment can add to the uncertainty that families face. Any uncertainty is bad, and with this increasing on multiple fronts, the consumer may start to pull back on spending.

Economic releases

Last week we had consumer confidence releases and the PCE inflation indicator. No major surprises. Fed “talking heads,” following the March FOMC meeting, seem to be saying higher for longer.

This week’s calendar, we have employment information galore. The highlight will be the non-farm release on Friday, but watch the quits data from the JOLTS release for clues to the future. See below for details.   


Despite a strong labor market, consumer confidence remains in an extended holding pattern. How you respond to a survey may depend on your circumstances, but you need to have a stronger underlying compass guiding you daily.

 Upcoming Economic Releases:PeriodExpectedPrevious
1-AprConstruction Spending MoMFeb0.7%-0.2%
1-AprISM Manufacturing IndexMar48.4 47.8 
1-AprISM Manufacturing Prices PaidMar52.8 52.5 
1-AprISM Manufacturing EmploymentMarN/A45.9 
1-AprISM Manufacturing New OrdersMar49.8 49.2 
2-AprJOLTS Job OpeningsFeb8,775,000 8,863,000 
2-AprFactory OrdersFeb1.0%-3.6%
2-AprFactory Orders ex TransportationFebN/A-0.8%
2-AprWard's Total Vehicle SalesMar15,900,000 15,810,000 
3-AprADP Employment ChangeMar150,000 140,000 
3-AprISM Services IndexMar52.8 52.6 
3-AprISM Services Prices PaidMarN/A58.6 
3-AprISM Services EmploymentMarN/A48.0 
3-AprISM Services New OrdersMarN/A56.1 
4-AprChallenger Job Cuts YoYMarN/A8.8%
4-AprInitial Jobless Claims30-Mar215,000 210,000 
4-AprContinuing Claims23-Mar1,810,000 1,819,000 
5-AprChange in Nonfarm PayrollsMar200,000 275,000 
5-AprChange in Private PayrollsMar165,000 223,000 
5-AprUnemployment RateMar3.8%3.9%
5-AprAvg Hourly Earnings MoMMar0.3%0.1%
5-AprAvg Hourly Earnings YoYMar4.1%4.3%
5-AprAvg Weekly Hours - All EmployeesMar34.3 34.3 
5-AprLabor Force Participation RateMar62.5%62.5%
5-AprUnderemployment RateMarN/A7.3%
5-AprConsumer CreditFEb$16.400B$19.495B

Mark Frears is a Senior Investment Advisor, Executive Vice President, at Texas Capital Bank Private Wealth Advisors. He holds a Bachelor of Science from The University of Washington, and an MBA from University of Texas – Dallas.

The contents of this article are subject to the terms and conditions available here.

Private Banking is provided by Texas Capital Bank (the “Bank”). Advisory services are offered through Texas Capital Bank Wealth Management Services, Inc. d/b/a Texas Capital Bank Private Wealth Advisors (“PWA”), a wholly owned subsidiary of the Bank and an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). SEC registration does not constitute an endorsement of the advisory firm by the SEC nor does it indicate that the advisory firm has attained a particular level of skill or ability. Brokerage services are offered through Kingswood Capital Partners, LLC (“Kingswood”), Member FINRA/SIPC. Texas Capital Bank Private Wealth Advisors and Texas Capital Bank are not registered broker/dealers and are independent of Kingswood. Investments and insurance products are not insured by Bank insurance, the FDIC or any other government agency; are not deposits or obligations of the Bank; are not guaranteed by the Bank; and are subject to risks, including the possible loss of principal. Nothing herein is intended to constitute an offer to sell or buy, or a solicitation of an offer to sell or buy securities. 

Investing is subject to a high degree of investment risk, including the possible loss of the entire amount of an investment. You should carefully read and review all information provided by PWA, including PWA’s Form ADV, Part 2A brochure and all supplements thereto, before making an investment. 

Neither PWA, the Bank nor any of their respective employees provides tax or legal advice. Nothing contained on this website (including any attachments) is intended as tax or legal advice for any recipient, nor should it be relied on as such. Taxpayers should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor or legal counsel. The wealth strategy team at PWA can work with your attorney to facilitate the desired structure of your estate plan. The information contained on this website is not a complete summary or statement of all available data necessary for making an investment decision, and does not constitute a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the authors and not necessarily those of PWA or the Bank.

©2024 Texas Capital Bank Wealth Management Services, Inc., a wholly owned subsidiary of Texas Capital Bank. All rights reserved. 

Texas Capital Bank Private Wealth Advisors and the Texas Capital Bank Private Wealth Advisors logo are trademarks of Texas Capital Bancshares, Inc., and Texas Capital Bank.

www.texascapitalbank.com     Member FDIC       NASDAQ®: TCBI