CFO Intelligence Magazine – Fall 2024
Tani Fukui, Ph.D
Macroeconomist, Director, Metlife Investment Management
DO LOWER PRICES MEAN CONSUMERS ARE GOING TO BE SPEND MORE?
Sort of. Higher-earning consumers still have a lot of money. Net financial assets of the top 20% of earners increased by 4.5% over the past year — more than double the long-run rate, according to the Fed. Some of this will doubtless go into savings, since consumer confidence is declining, and the labor market is feeling less favorable to workers. But they retain a lot of spending power to buy what they view as their priorities. On the other side of the spectrum, low-earning consumers have started to struggle. Price levels remain uncomfortably high, with price levels on many necessities elevated, even relative to many workers’ higher wages. Delinquencies are up; bankruptcies are rising; and all of this is before even considering the Buy Now, Pay Later shadow credit market, which is still largely excluded from official statistics
I DON’T BUY THIS INFLATION IS STILL A SERIOUS PROBLEM FOR MY BUSINESS.
Unfortunately, both can be right. The final demand Producer Price Index (PPI) is once again increasing after a period in late 2023 when producer price inflation was quite low.