The pin is being pulled on a grenade which will deliver a significant blow to America’s vulnerable retail sector.
“The redbook sales are going to take another leg down once student loans come back on the books,” explains veteran Hedgeye Retail analyst Brian McGough in this clip from The Macro Show. “We’ve got to get past that, and quite frankly it scares me. If we didn’t have this coming down the pike, I might be bullish on retail already, but I’m not because it’s such a major factor.”
When the pause on student loan payments expires at the end of this month, it won’t just be recent graduates who feel the impact.
“The debt is also really held by the parents of these students, you’re talking up to age 55 years old,” McGough adds. “That touches everyone: Target (TGT), Home Depot (HD), Lowe’s (LOW). You’re talking about $300 a month per consumer. That’s going to touch all of retail.”
“I would challenge anyone to give me any retailer this would not affect.”
This is happening at a time when credit card balances are up +17% Y/Y and interest rates on those balances are at all-time highs.
Watch the full clip above.
