Brandy Auterson-Hurst:
4 Your Money is brought to you by NelsonCorp Wealth Management. It’s now time for 4 Your Money. We’re joined by John Nelson, financial planner at NelsonCorp Wealth Management. Welcome back, John.

John Nelson:
Oh, thanks for having me, Brandy.

Brandy Auterson-Hurst:
So there’s been some concern lately about consumer stress in the economy. Can you shed some light on what’s driving this trend?

John Nelson:
Yeah, absolutely. Yeah, we are starting to see that take shape. Even though financial markets are at literally all time highs, we’re seeing home prices at elevated levels especially over the last five years. And what I have with me today is a graphic that just illustrates some of the pressures that many are feeling at this point. This is illustrating delinquency rates for consumer loans at commercial banks. What we saw in the last quarter of last year is that this rose by 2.6%. Although we still feel many homes financially are in pretty good shape, the household wealth is higher now than pre-pandemic, this is a little bit of an area of concern as we see this pick up and something we’re watching very closely right now.

Brandy Auterson-Hurst:
So how might this affect the broader economy and what should investors consider in response?

John Nelson:
Yeah. Consumer spending is a significant part of our economy. By one gauge, it accounts for 70% of US GDP. So if we see people starting to pull in, get more conservative, spending isn’t there where it has been? It certainly has implications for financial markets. And when this has taken place in the past, it’s during times of slowdowns, economic slowdowns, and recessionary periods of time. So consumer spending is pivotal role in our overall economy and something we’re watching very closely, Brandy, in the coming months.

Brandy Auterson-Hurst:
All right, John. As always, thanks for joining us.

John Nelson:
Yeah, thank you for having me.

 

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