🌍 The US consumer taps out in 2023 — recession unavoidable

“one of the biggest surprises of 2023 is that we didn't have a recession. I mean, I think most people were betting on a recession in 23 They thought that a soft landing would be almost impossible.”

“The GDP is 5% or something like that and unemployment is low. So the economy is actually doing extraordinary. That's just the fact.”

“maybe the overall economic data right now is mixed to positive. I'll certainly concede that.”

“That is Federal Reserve data that tells the truth about the US economy. And it turns out that the economy is pretty good and doing a lot for a lot of people.”

“everybody's going to wake up with a heck of a credit card bill at 15 or 20 percent, and they're not going to be able to pay it”

“at some point, the consumer realizes that they're just not as wealthy as they thought they were ... you just wonder if the consumer is like Wiley Coyote and has gone off a cliff but just hasn't looked down yet”

“Meaning everyone's talking about a soft landing. Everyone's banking on a soft landing. But soft landings are actually exceedingly rare. ... When you have very fast rate tightening cycles, it generally has a very predictable effect on the economy. There's a lag, but the effect is very predictable, which is it causes recessions. ... But I think the consumer hasn't been hit yet.”

“some of these industries where you have these large ticket purchases that drive consumer consumption, their backs are against the wall ... I do think that you're going to just have a little bit of belt tightening in the consumer.”

“They're going to skip an iPhone cycle. Instead of going from 13 to 14 or 14 to 15, they're going to go 13 to 16, 14 to 17 ... They're going to skip upgrading their car.”

“So, we have record household debt, 17.1 trillion, record mortgage debt, 12 trillion, record auto loans, 1.6 trillion, record student loans, 1.6 trillion, which, as Druckenmiller points out, have to start being repaid, I think, as of September because Supreme Court overturned Biden's unconstitutional debt forgiveness. Record 1 trillion in credit card debt, that I think should be pretty worrying because credit card rates are now around 25%.”

“Yeah, consumer debt is high, this real estate, commercial real estate is high. We've got debt everywhere. And people are going to have to belt tighten and maybe austerity and stop spending on some YOLO trips.”

“And that's starting to translate through into what everyone's been worried about, which is the recessionary or declining effect on revenue, declining effect on profit of companies that are selling goods and services.”

“I've been surprised at just how resilient the economy has been.”

“We're going to get people off the sidelines, into the labor market, and things will keep going”

“Is this the last hurrah summer? People, consumers are going to need to get back to work in September because it seems like the credit card debt's going up”

“So for the number to be this low tells me that is not just about interest rates. I think consumer confidence is also plummeting and people are feeling more insecure. So I think it's just another economic indicator that things are looking really shaky right now.”

“Given what's going on with these banks and what's going on in this kind of a, I think we all agree, the soft landing concept is over. We're going to be in a recession.”

“Add in the things that Chamath's talking about, and I'm not sure you took a lot of money out of people's pockets.”

“So there is more and more money coming into people's pockets that we don't realize.”

“we're going to run into a real wall with respect to consumer credit ... consumers are not going to be able to meet their debt obligations. And it's going to be really ugly. ... the stretching is going to snap this year.”

“buy now, pay later, that's a category starting to break. Credit card debt, ... people's savings are going down. So the consumer's back has been broken. I think we're just going to feel it in the first and second quarter.”

“my biggest loser for business in 23 is the consumer. I just don't understand how the consumer isn't going to finally tap out ... don't understand how we're going to avoid a recession. ... I think the recession is here. It's just very unequally...”