The Maverick of Wall Street: Consumer Stocks Are Crashing As Credit Card Delinquencies Hit the Highest Level Since 2008

Consumer spending remains the lion’s share of the U.S. economy. The past few years have seen some big shifts in consumer spending trends. During the pandemic, consumers were flush with cash from staying at home. But they spent money on electronics to work at home. And on home goods.

That trend shifted towards spending more on travel and tourism as the pandemic ended. And the excess savings have started to dwindle down. Now, signs point to a further slowdown.

The excess cash from the pandemic era is gone. Credit card balances are on the rise. That suggests that consumers are financing their current lifestyle with borrowing.

Now, credit card delinquencies are trending higher. And companies are reporting that they are unable to pass on further price hikes to consumers.

The result? Any continued inflation will hit the corporate bottom line.

Consumer stocks have already started to show some weakness going into the second half of the year.  That weakness could accelerate should earnings indicate a big slowdown.

In any event, today’s investors may want to get more defensive following the big rally in stocks. But consumer defensive stocks may not be the best place to invest this time around.

Instead, defensive stocks such as utilities might offer the best return relative to today’s risks of a slowing consumer.

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