The US consumer has been a source of strength for the economy in the wake of the Covid-19 pandemic. But cracks may be starting to show in consumer finances, according to PayPal CEO Dan Schulman. While the economy is “not out of the woods yet,” he adds, inflation is beginning to fall and we’re “moving in the right direction.”
“The consumer has been pretty resilient — I think everyone’s seen that,” Schulman said in an interview with Goldman Sachs chairman and CEO David Solomon at the Communacopia + Technology Conference in San Francisco. “But I do think the consumer is somewhat fragile right now.”
Schulman points to household savings that are “coming down quite meaningfully,” as pandemic-era government benefits are exhausted and spending on so-called “revenge travel” peaks. Schulman also cites data showing that consumer credit is reaching record levels. “You’re beginning to see credit defaults tick up a little bit,” he says.
That assessment aligns with other company leaders’ views expressed during second-quarter earnings. Goldman Sachs Research found that a theme during the most recent earnings season was “newfound concern” about the health of the lower-income consumers due to rising delinquency rates on credit cards and subprime loans for cars. But the team also noted that its analysis of retailer financial results indicates the lower-income consumer is “outperforming.” Credit card data tells a similar story of outperformance, though spending by lower-end consumers is expected to slow somewhat in the fall.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData