Could we see a repeat of the Great Recession? Based on key data Iâm seeing, itâs possible. Let me explain whatâs going on here⦠And what lies ahead for investors like you. For a transcript of this video, see below. This transcript has been lightly edited for length and clarity. Could We See a Repeat [â¦] Youâre receiving this email as part of your subscription to Andrew Zatlinâs Moneyball Daily [Unsubscribe]( [Moneyball Daily] Could We See a Repeat of the Great Recession? November 21, 2023 Could we see a repeat of the Great Recession? Based on key data Iâm seeing, itâs possible. Let me explain whatâs going on here⦠And what lies ahead for investors like you. [CLICK HERE TO LAUNCH VIDEO OR READ THE FULL TRANSCRIPT BELOW »»]( For a transcript of this video, see below. This transcript has been lightly edited for length and clarity. Could We See a Repeat of the Great Recession? Happy early Thanksgiving, readers. Iâm sure youâve got a favorite dish youâre looking forward to. As for me, Iâm eager for my signature sweet-potato casserole. Itâs to die for. But speaking of dining and consumption, Iâm looking at some worrisome consumer data. Essentially, consumers are in debt â a lot of debt. And if theyâre not careful, they could trigger a repeat of the Great Recession of 2008/2009. Let me get you up to speed on the situation. An Annual Tradition To set the stage, letâs focus on an important theme thatâs central to this weekâs calendar. No, Iâm not talking about family, food, or football. Iâm talking about holiday shopping. Black Friday is just days away, which marks the unofficial start to the shopping season. And initial signs point to robust spending. Inflation, for example, is back down to around 4%. Additionally, more shoppers are ready to spend. Two and a half million people joined the workforce since this time last year. These factors help explain why the National Retail Federation (NRF) is projecting this holiday season to include a spending increase of around 3% to 4% â solid. But hold on a second⦠A Different View If you look below the surface, youâll see a different outlook. In fact, retailers and shipping companies are very worried. Consider department-store chain JCPenney, for example. This year, itâs hiring 12,000 fewer seasonal workers. Competitor Macyâs is hiring 3,000 fewer. And then thereâs Walmart. Last year, the retail giant hired 40,000 seasonal workers. This year? Zero. FedEx is even telling its airline pilots to look for work elsewhere because itâs not expecting an abundance of shipments. Whatâs going on? Why such different outlooks on the shopping frenzy? Seeing the Problems First-Hand For starters, retailers view inflation a bit differently than the NRF. Remember the NRFâs 4% spending growth projection? With inflation still hovering at around 4%, that growth projection is akin to flat or even downward sales growth compared to last year. Furthermore, the NRF is making broad projections based on all consumers. Meanwhile, retailers like Walmart have insights into how certain demographics are faring, particularly low-income consumers, Walmartâs most popular shopper. Interest rates are high, wages are stagnant, and lower-income consumers are living paycheck to paycheck. Many arenât even able to get by on their income. And that means theyâre turning to loans and debt to survive. Walmart is seeing this first-hand. And thatâs why itâs tempering expectations this holiday season. But letâs focus more on the rising debt, because thatâs what could trigger another Great Recession. Another Great Recession? You see, a key factor in setting the Great Recession in motion 15 years ago was a simple, but dramatic shift. Basically, money that was easy and cheap to acquire became difficult and expensive. Millions of borrowers were quickly denied access to funds and, as a result, delinquencies and debt soared. Weâre seeing this happen again right now. As the Fed has raised interest rates, money has become more expensive to borrow. And consumers â particularly lower-income ones â havenât been able to secure the additional funds they need. Thatâs sent delinquencies skyrocketing. Take a look: This chart shows credit-card delinquency rates over the past 14 years. The data is broken out by different card issuers, but it doesnât matter. American Express, Capital One, Discover â delinquency rates are up across the board. In fact, theyâre the highest level in a decade. Auto delinquencies are up, too, especially among a group known as subprime borrowers. These are consumers who donât make a lot of money and/or have poor credit, so theyâre forced to borrow money on less than ideal terms. According to recent data, subprime loans to auto buyers reached a delinquency rate of 6%. In other words, one out of every 15 people who bought a car with a subprime loan isnât paying it back. Thatâs the highest rate in 30 years! A Harsh Reality Look, times are tough. And consumers are struggling. It can be difficult to push through a retail-obsessed holiday season. But itâs the reality we face. And sure enough, there are investment opportunities because of it. If youâre a consumer, hold off on buying any big-ticket items. Retailers are going to be slashing prices in 2024 as they race to get consumers back in the doors. Meanwhile, investors should look back at 2008. Use the Great Recession of 2008/2009 as a proxy for where and how to invest. Thatâs the strategy Iâm using. And Iâve found an intriguing opportunity that Iâm sharing with my Pro subscribers. So make sure youâre one of them. Weâre in it to win it. Zatlin out. FOR MONEYBALL PRO READERS ONLY
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