top of page


Updated: Jul 20, 2023

Some of this week’s headlines:

Italy’s PM Draghi floats creation of oil consumer ‘cartel’ after Biden talks. (A monopoly of desperate oil buyers? Genius. Tell us more...)

Unruly U.S. air passenger incidents fall to lowest level since 2020. (Less fighting? And all we had to do was take off our masks?)

Inflation barreled ahead at 8.3% in April from a year ago, remaining near 40-year highs. (The remedy of high interest and tight money is going to feel like financial chemotherapy.)

Warren Bill Would Require Companies to Explain Price Hikes. (You can go with your gut on this one-- that really is Socialist.)

House Passes Bill For $40 Billion In New Ukraine Aid. (We have no idea what happens to weapons sent to Ukraine. Not a single branch our military can even pass its own internal audit, for chrissake.)

Gas Prices Surge to New Record High. (Let’s see how long we can blame this on Russia.)

Be heartened, readers; after another horrible week on both fronts, we will not comment about abortion and gun control headlines. Your financial advisor’s position on these issues don’t much matter anyway, although I will opine that the traditional bedrocks of the American system— a stable economy, energy independence, vast surpluses of food, hallowed universities, a professional judiciary, and a credible criminal justice system— are being shaken to their cores, and the events of the past week certainly serve to undermine our collective confidence in the overall economy and our relationship with our fellow man. Or person. Or whatever.


Inflation has been deservedly grabbing a lot of headlines of late. While I agree that it’s pretty great that fewer fights are occurring on airplanes, I’d rather fly with my head on a swivel than pay four times as much for my ticket. (For the record, my wife disagrees with this particular preference.)

But the fact is that wages are up, yet consumers are worse off. Average hourly earnings have risen 5.5% over the last year, but real inflation-adjusted earnings are down 2.6%. So, how are Americans making ends meet?

They’re charging it.

In a nutshell, the Federal Reserve and the US government built a post-pandemic “economic recovery” on stimulus and debt. That stimulus and those savings are now gone.

Revolving credit, which is primarily credit card debt, rose by 35.3% in March. American consumers added $31.4 billion to their credit card bills in a single month. US credit card debt now stands at just under $1.1 trillion.

Consumer debt continues to climb at a staggering rate. Total consumer debt rose by $52.4 billion in March, a 14% increase according to the latest data released by the Federal Reserve. Outstanding consumer debt now stands at $4.54 trillion.

The Fed’s consumer debt figures include credit card debt, student loans and auto loans, but they do not factor in mortgage debt. When you include mortgages, US consumers are buried under more than $15.8 trillion in debt. What’s more, that does not appear to be enough. Credit card balances are not only growing, but consumers are looking for ways to borrow even more-- Americans opened 229 million new credit card accounts in the first quarter.

With rising interest rates, it follows that Americans will soon be paying more in interest charges every month, and many will see their minimum payments rise.

Fed officials insist they will be able to raise interest rates and tighten monetary policy because the economy is strong, but the rising levels of debt (and the big contraction of GDP in Q1) seem to indicate that the apparent economic strength they cite is a mirage. Running up credit cards is not a sustainable economic model.


The S&P 500 has seen one of its worst starts to the year since World War II. However, history suggests that markets tend to recover given supportive fundamentals. According to Goldman Sachs, non-recessionary calendar years with 13%+ drawdowns have seen an average annual return of 2%. In fact, 7 of 15 years saw a positive annual return and in 14 of those 15 episodes, the S&P 500 outperformed 2022's YTD returns.

That’s the kicker, though-- Goldman’s talking about non-recessionary years, and we have been calling here in Insights for a recession this year for quite some time. So, while we’re on board with BofA and Citi that further declines may be in store for stocks, we believe there is meaningful upside for the S&P 500 and just think Goldman is a little early. As the old saying goes, Buy when there’s blood in the streets and no baby formula on the shelves.

For disclosure information please visit:

Recent Posts

See All

Just Keep Swimming

Prices for everything are too high, butwhere do you think stock prices will be ten years from now, higher or lower?


Divebombing into stagflation nation.


bottom of page