With the war in Ukraine, the fallout from the pandemic and record levels of inflation, the U.S. economy has taken a blow in 2022. But it's not clear what, exactly, is causing the ongoing downturn. A group of finance experts joined Roundtable to discuss inflation, markets, policy and their continued prognosis for the economy. In this segment, the panel talks about inflation, consumer spending, and debt.
David Zell notes that gas prices and car payments are draining the wallets of many Americans.
“About a fifth of the country is spending anywhere from 20 to 25% of their income on gasoline, and that's before gas prices functionally doubled. So some of the most like low income people in the United States are now paying 40% of their paycheck towards fuel costs,” he says.
“Auto loan default rates have been skyrocketing lately. The logical implication of that is a massive decrease in consumer spending and discretionary spending, which all contributes to negative GDP growth.”
Marc LoPresti observes that consumers have continued to spend, especially on travel, but they haven’t yet felt the consequences of their spending.
“People are putting this summer on their credit cards. They are ignoring what's in the bank. We're seeing consumer credit card balances go up and up and up,” he says.
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“So what I think you're gonna see a pretty grim picture towards the end of the year for the lower income and maybe even the middle-income consumer. We're going to see a further bifurcation between the haves and the have-nots.”
Watch the full discussion below:
Jon Najarian, Co-Host, CNBC Halftime Report
Marc LoPresti, Managing Director, Moneta Advisory Partners
David Zell, Founder, Bitcoin Policy Institute