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Banks in Turmoil

So how are consumers feeling about the economy post-SVB?

Matt Levin Mar 30, 2023
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February consumer spending numbers will show whether January's spending numbers were an anamoly. Spencer Platt/Getty Images
Banks in Turmoil

So how are consumers feeling about the economy post-SVB?

Matt Levin Mar 30, 2023
Heard on:
February consumer spending numbers will show whether January's spending numbers were an anamoly. Spencer Platt/Getty Images
HTML EMBED:
COPY

On Thursday, the Commerce Department gave us an updated picture of how the economy was doing at the end of last year.

For the fourth quarter of 2022, real GDP grew at an annualized rate of 2.6% — that’s revised down a tick from the earlier estimate of 2.7%. Commerce said consumer spending was slightly lower, once they checked the receipts.

Those GDP numbers are just an appetizer for the smorgasbord of economic data coming on Friday. We get the personal consumption expenditures price index, the Fed’s preferred inflation measure, as well as consumer spending and a new measure of consumer sentiment.

Now, most of the data released tomorrow will be from February — before the whole Silicon Valley Bank debacle. So how many grains of salt we should sprinkle over that smorgasbord?

OK, so pretend for a second it’s February again, back when you associated the phrase “bank run” more with that old movie “It’s a Wonderful Life” than with startup CEOs freaking out on a WhatsApp thread.

Back then, the big question for economists like Bank of America’s Aditya Bhave was, is consumer spending picking back up? “Because January was just extraordinarily strong,” he said.

The February consumer spending numbers we get on Friday will tell us whether January was some sort of binge-shopping anomaly. Now, all that spending obviously occurred before March (banking) madness

But Bhave said you shouldn’t expect future consumer spending to fall off a cliff. “Consumer impact is going to play out somewhat slowly,” he said.

On Friday, we will also get new inflation numbers. Pre-SVB, the conversation around the Fed would be “OK, was inflation still high enough to warrant more rate hikes?” Now, the conversation is “Do we need to raise rates more if all this banking chaos is kinda doing the job for us?” 

“Conditions have tightened more significantly since the banking crisis, and that’s going to impact March, and then the data going forward,” said Shannon Seery, an economist with Wells Fargo.

The one data point coming out Friday that will include the impact of Silicon Valley Bank is the consumer sentiment survey.

From what Jesse Wheeler sees at polling firm Morning Consult? “Consumer sentiment data has dropped pretty considerably in the last couple weeks.”

Wheeler said that reverses several months of us feeling better about where this economy was going

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