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.

Inflation Causing Disposable Income Downtrend - msrr

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.

Learn more about the Market Situation Report written by Tier 1 Alpha.

Inflation Causing Disposable Income Downtrend - large image  18


Join New Subscriber Orientation

New Conference: Hedgeye Live 2024 May 2-5

Hedgeye University | Become a Better Investor

Hedgeye Education Center | Learn More About Hedgeye