In this clip from today’s edition of The Macro Show, Hedgeye Communications analyst Andrew Freedman discusses the impact of pandemic-induced Federal Spending on net wealth creation (and therefore consumption). In particular, Freedman explains how a Rate of Change slowdown in wealth creation will help drive an economic slowdown.
“A massive increase in net wealth creation coming out of the pandemic, multiple standard deviations. This has a massive impact on consumption and overall sentiment. BUT, really what matters here is the Rate of Change; are you getting more wealthy, or less wealthy? That is what’s going to influence your next marginal purchase.”
“You can say people are better off than they were pre-pandemic; but if their net wealth is trending in the wrong direction (even if it is ‘better’), that’s not good for consumption compared to when things were hockey-sticking.”
