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Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here. |
Today's bonus chart juxtaposes personal saving rates with real disposable income, revealing a notable decline in the latter due in part to rising inflation and higher rates. Typically, a downtrend in disposable income might signal a dip in personal savings, which could be a windfall for retail sectors as consumers dip into their savings for purchases.
However, not shown on this chart is the burgeoning trend of "Buy Now, Pay Later" (BNPL) programs, which have become a pseudo-extension of disposable income for numerous families. BNPL schemes, resembling personal installment loans, usually offer zero interest if payments are met punctually and in their entirety. A critical advantage of BNPL services is their accessibility; they often don't require a specific credit score, though some may conduct a soft credit check to gauge a user's creditworthiness, ensuring easy access for most consumers. It also makes accurate credit monitoring problematic.
To contextualize BNPL's growing influence and its psychological appeal, consider the 2023 holiday shopping statistics: BNPL sales hit $17 billion. Users of BNPL services spent 48% MORE than those who chose alternative payment methods during Black Friday sales. Adobe Analytics data reveals that on Cyber Monday, BNPL accounted for $940 million in transactions — a 42.5% increase from the previous year, marking the method's most significant usage in a single day. Credit card debt continues to rise. BNPL is just spending on top of spending; it hasn’t come at the expense of credit card usage. No pun intended.
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Learn more about the Market Situation Report written by Tier 1 Alpha. |
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