On Friday the second quarter GDP number came out at 4.1%, which is extremely high. A lot of people don’t realize that this number represents the total growth of the U.S. economy, net of inflation. If you assume the inflation back in, it actually grew at 7.4%. This is a phenomenal number considering the size of our economy.
Earnings and GDP came in very good last week. However, we have two items that we think are a bit concerning and need to keep an eye on. The first is housing. Housing sales slipped for the third month in a row. These sales now represent a five month low. We are starting to see the impact of higher interest rates. In addition, the low supply is creating higher prices.
Consumer Debt Delinquencies
The second item we find a bit concerning is credit card and car loan delinquencies. For the past seven years, consumer debt delinquencies have steadily declined, but, have ticked back up the past few months. This is an area we need to watch closely because it was a factor in leading to the 2008 financial crisis.
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