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July 2022 / VIDEO

Consumers Are Financially Strong, But Inflation Looms

Government stimulus and a robust labor market have resulted in strong consumer balance sheets, but the wildcard is inflation.

Key Insights

  • Pandemic-related stimulus combined with a robust labor market have resulted in consumer balance sheets that are stronger than before the pandemic.
  • Consumers are releveraging, with aggregate credit card debt recently rising above pre-pandemic levels.
  • However, if inflation stays elevated, consumers will need to lean more heavily on their savings to fund purchases, reducing average checking account balances.

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Randal Jenneke Head of Australian Equity at T. Rowe Price

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