Record Consumer Debt Absorbs Inflation

Mobius Intel Brief:

Consumer prices measured by the consumer price index (CPI) aligned with most market expectations, passing the ‘Goldilocks’ test without escalating recession fears.

• The all-item CPI increased 0.2% from June and 2.9% from July 2023. The Fed’s preferred core CPI gauge, stripped of food and energy prices, increased 0.2% from June and 3.2% year-on-year.

While relevant to the Fed’s broader rate cut discussion, today’s headline CPI numbers only confirm that the price growth is increasing, albeit at a slower rate. The narrow scope of headline (month-month and year-year) changes have limited utility in gauging 2H24 demand expectations.

Instead, 2H24 consumption forecasts require a closer look at the nexus between the long-term decline in consumer purchasing power (-21.3% since July 2020) and record household debt outstanding ($17.8 trillion) in 2Q24.

On This Intel Brief

• Record Consumer Debt Absorbs Inflation

  • Tapping Leverage for Living Expenses

  • Household Debt by Category

• Why Consumer Debt Trends Matter

  • The Takeaways for Commodity Markets

Pro charts, statistics, and analyst insights below.