So how much is it really?

Everyone has been pretty surprised by how well the consumer is holding up. Myself, and plenty of peers, thought we would be in the throws of recession by now. And yet, earnings has held up better than expected and some analysts are even increasing forecasts. I still believe a recession is coming given my research, but it may continue to be delayed until the Covid savings have been spent.

But how much extra money is really still out there?

I've seen a few charts and all vary. This one from Longview suggests it's basically spent up, however one from Apollo suggests there is another $1 trillion left. If anyone wants to post additional estimates in the comments, please feel free.

It is interesting in the attached chart that the excess started down in 2022 along with the market. But this rally keeps puttering along even as the excess dwindles further. But the narrowness of the gains explains some of that.

Payrolls posted another strong report last Friday so I think the consensus view of a interest rate hike "skip" in June and a raise in July seems overly optimistic. The household survey of unemployment can be noisy and there doesn't seem to be anything else that would cause the Fed to skip June. So we'll see if we get a surprise hike next week.

Even if we do, I think direction of markets will be dictated by how accurate these numbers are on "excess" savings, range bound or a slow grind up until they run out. Credit card debt and delinquencies are rising, so maybe we are close to an end?

If Longview is right, then we could see the recession sooner than later. If Apollo is right, it might get pushed off to 2024. But to say it won't happen seems a bit much. We'll see.