Texas Capital Bank Client Support will be closed for Labor Day on Monday, September 2, 2024. We will be back to our normal 8:00 AM to 6:00 PM support hours on Tuesday, September 3, 2024.

Texas Capital's Quarry Heights Financial Center is closed today, Friday, September 27, 2024. For clients located in the San Antonio area, please visit our Brackenridge Financial Center.

U.S. Consumer — Week of September 9, 2024

""

Health of the growth engine

Essential Economics

— Mark Frears

U.S. households

Do you like breakfast for dinner? At our house, we do, and apparently, we are not alone.  

Per capita consumption of the eggs in the United States from 2000 to 2024

Eggs are great in everything from omelets to French toast, to over-easy on top of pancakes. Yum. They have even been used on the ice in hockey practices, as seen in the original Mighty Ducks flick. Classic. Can you make a soft catch? 

The current economy is probably in a soft-boiled state. Not solid like a hard-boiled egg, but not fragile either. Let’s take a look at what U.S. households are thinking. 

 

Fed study

Most people think the economy is doing OK. They have jobs, but inflation is still having an impact. The Fed study we are looking at shows that people in 2023 felt about the same from a financial well-being state as in 2022. The Survey of Household Economics and Decision Making (SHED) is done by the Federal Reserve Bank on an annual basis: https://www.federalreserve.gov/publications/files/2023-report-economic-well-being-us-households-202405.pdf. This study was published in May 2024, based on data gathered in October 2023. As you can see below, we are on a downward trend.  

At least doing okay financially(by year)

Inflation continues to be the top financial concern, even as we have seen improvement here. 

Categories of self-reported main financial challenges in 2016, 2022, and 2023

 

Employment 

Coming out of the pandemic, we hear much about working from home. The chart below shows the current state by education level. 

Amount of work done from home (by education)

In 2023, 16% worked fully from home, while 23% did so some of the time. Prior to the pandemic, only 7% worked mostly from home.  

There were changes to both income and spending from the previous year. As you see below, income increased by 34%, but that did not keep pace with expenses going up by 38%.  

Share with increases and decreases in monthly income and spending from 12 months earlier (by year)

The chart below shows how lower-income families tend to spend more than their income. They cannot keep up with higher costs, showing the fight against inflation is not over.  

Monthly speeding relative to income (by family income)

Emergency, or unexpected, expenses can often derail a budget. The chart below shows that households were at the same place in 2023 as in 2022. Sixty-three percent of them could meet a $400 expense with cash.  

Would cover a $400 emergency completely using cash or its equivalent (by year)

This is back to pre-pandemic levels, but it would be good to see the prior uptrend continue.

Housing 

This category is the largest component of households’ budgets. Sixty-four percent of families own their homes, and two-thirds of those had a mortgage. As you can see below, the median monthly mortgage payment was $1,500.

Median monthly mortgage payment (by census region and most recent move)

There is significant variability based on the region of the country and how recently you moved. What caught my eye was the difference between moving after 2022. This added, on average, $700 to your payment. An increase of 50%. 

Those who rented, by choice or necessity, faced slightly lower expenses. As seen below, median overall rent was $1,100. 

Median monthly rent payment ( by census region and most recent move)

The reasons for renting were very similar to 2022, as you can see below. 

Reason why renting (by year)

 

Retirement and investments

If you are not retired yet, how are you doing in saving/preparing for this significant life event? Per the chart below, only 34% feel they are on track, but this is up from 31% in 2022. 

View retirement savings plan as on track (by year)

As for the ones already at this stage, 27% of adults, how are they doing? Four percent of retirees are still working. The chart below shows the range of financial well-being among those in retirement.  

Financial well-being among retirees without labor income

As you can see, the ones relying fully on social security are less OK. 

If they have investments to rely on, there is a wide range of comfort in managing those assets. The chart below breaks this out by investable assets and gender.  

Mostly or very comfortable choosing and managing investments

 

Looks like an opportunity for investment advisors to come alongside people! 

Possibly, this view makes you feel like you are doing OK, or maybe it opens your eyes to how many are living from a financial well-being perspective. The economy seems to be chugging along, with a few cracks starting to show. The question now is whether a Fed easing will have an impact, or whether this is a hopeful move toward a soft landing. Stay tuned. 

 

Economic releases

Last week was all about jobs, and the picture is of a slowing labor market, but not one contracting.  

This week’s calendar is all about inflation, with the all-important last major indicator before the FOMC meeting on September 17-18. CPI is the headliner, but we also have PPI, Consumer Credit and Consumer Sentiment. See below for more details. 

 

Wrap-Up

The cost of eggs did skyrocket during and after the pandemic, but it didn’t seem to slow demand. What are essential items for your family, and what are you willing to give up in order to have them? 

 Upcoming Economic Releases:PeriodExpectedPrevious
9-SepNY Fed 1-yr inflation expectationsAugN/A2.97%
9-SepConsumer CreditJul $11.200B$8.934B
     
10-SepNFIB Small Business OptimismAug93.7 93.7 
10-SepFirst Presidential Debate8p CT  
     
11-SepConsumer Price Index MoMAug0.2%0.2%
11-SepCPI ex Food & Energy MoMAug0.2%0.2%
11-SepConsumer Price Index YoYAug2.5%2.9%
11-SepCPI ex Food & Energy YoYAug3.2%3.2%
11-SepReal Avg Hourly Earnings YoYAugN/A0.7%
11-SepReal Avg Weekly Earnings YoYAugN/A0.4%
     
12-SepInitial Jobless Claims7-Sep227,000 227,000 
12-SepContinuing Claims31-Aug1,850,000 1,838,000 
12-SepProducer Price Index MoMAug0.2%0.1%
12-SepPPI ex Food & Energy MoMAug0.2%0.0%
12-SepProducer Price Index YoYAug1.7%2.2%
12-SepPPI ex Food & Energy YoYAug2.4%2.4%
12-SepHousehold change in Net WorthQ2N/A$5,117B
12-SepMonthly Budget StatementAug-$276.0B-$243.7B
     
13-SepImport Price Index MoMAug-0.2%0.1%
13-SepExport Price Index MoMAug-0.1%0.7%
13-SepUM Consumer SentimentSep P68.3 67.9 
13-SepUM Current ConditionsSep P61.5 61.3 
13-SepUM ExpectationsSep P70.5 72.1 
13-SepUM 1-yr inflationSep P2.7%2.8%
13-SepUM 5-10-yr inflationSep P3.0%3.0%

Mark Frears is a Senior Investment Advisor, Managing Director, 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