Hudson Glade Insights: A Roaring Twenties Redux?

“It was the best of times, it was the worst of times…”, Charles Dickens, A Tale of Two Cities

It is largely known that consumer balance sheets have never been in better shape. With spending down, credit balances lower, and checking accounts up, many believe we are headed for a roaring 20s redux. We don’t see it.

While it has been reported that the median checking account at one of the largest banks in the country was up over 50% from two years ago, we note that median now sits at just $1,900. Personal savings rates have already returned to pre-pandemic levels. With stimulus checks, expanded unemployment benefits, and other pandemic era programs a thing of the past, we believe the draw down on those savings accounts has begun. Furthermore, we expect such drawdowns to come quickly. The average family of four faces an increased heating bill this winter of a reported $700 to $1,700. That alone could wipe out the reported increase in savings (if not nearly the entire account) even before the additional $700 or more comes due that a typical family of four will likely pay this year to put food on the table. This does not even consider increased fuel and transportation costs.  On the contrary, we do find it notable that the typical luxury consumer has seen his or her savings increase by more than $100,000 during the pandemic and that rising home prices are likely to benefit all homeowners to some extent.

Considering the dynamics above, we remain disciplined in our approach and continue to be interested in businesses and companies that serve those markets with recurring demand for essential services and needs as well as those likely to benefit from rising home prices.

This Insight expresses the views of the authors as of the date indicated and such views are subject to change without notice. Hudson Glade LLC (“Hudson Glade”) has no duty or obligation to update the information contained herein. Further, Hudson Glade makes no representation, and it should not be assumed, that past investment performance is an indication of future results. Moreover, wherever there is the potential for profit there is also the possibility of loss.

This Insight is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services or an offer to sell or solicitation to buy any securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Hudson Glade believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based.

This Insight may not be copied, reproduced, republished, or posted in whole or in part, in any form without the prior written consent of Hudson Glade.