QI TAKEAWAY — Main Street has yet to capitulate to the reality of recession despite it being abundantly clear in the sales outlook and current earnings performance. The curtailment of broad-based regional spending will limit small business owners’ ability to continue raising prices. Relief on the stretched inventory front for small businesses bolsters the peak inflation narrative. In the aggregate, these disinflationary forces should limit the upside in long duration bond yields.
- In BofA’s latest drop of credit card data, spending was broadly weak across geographic regions and goods categories; only the top quintile of income earners saw its share of total card spending push above pre-pandemic levels, with the rest unable to expand their leverage
- Though the NFIB’s headline had a third straight monthly gain in September to 92.1, it remains just off June’s post-pandemic low of 89.5; meanwhile, price expectations have fallen at a record pace alongside the outlook for future sales volumes, which remain depressed
- A net 1% of small businesses surveyed reported current inventories that were too low in September, the lowest in two years and well off November 2021’s 15% high; as a z-score, it fell to a 0.9 print and reliably guides core goods CPI, which has much more room to fall