Random Walk at Night: Back-to-normal isn't good enough

The only way forward is better than before

Random Walk at Night takes a look at the macro signals and concludes “everything is fine.” Unfortunately, that’s not good enough.

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Editor’s Note: everything reads better in your browser or in the app. The footnotes especially, and Random Walk is really leaning into the footnotes. Plus, if you have the app, you can set delivery to “app only” and then my daily barrage will feel less like a barrage. Unfortunately, substack does not yet have a “Weekly Digest” option, but I’m hectoring them aplenty.

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Random Walk at Night

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Back-to-normal isn’t good enough

BofA’s CEO just offered his view of what to expect, based on BofA’s oodles of customer spending and account data (via

The Transcript

):

The key line is really the last one:

“4% [YoY growth] is consistent with the spending we saw in the pre-pandemic period . . . that is consistent with a low inflation, lower growth economy . . . so growing, but growing [] consistent with a low growth, low inflation economy.”

It’s a relatively optimistic view, and there is definitely data to support it, and it jives with what Random Walk has previously described as “the middling outcome.”

The issue, however, is that it’s not optimistic enough to make all the pieces fit together.

“Low growth” is better than no growth, but it’s not going to get it done.

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Everything is pretty much ok

On the good news side, as per Moynihan, consumers are in fact still spending money. JPM’s transaction panel tells the same story:

Notice the little blue bump at the end—that’s more spending.

Is that an early holiday bump? Amazon prime day? Perhaps, but whatever it is, it’s people choosing to part with their money, presumably because they think they can afford to.

• On an inflation-adjusted basis? Not very impressive.

• Have student loan repayments fully kicked in? No, they have not.

It’s neither bullish nor bearish . . . it’s middling. It’s fine. It’s soft-landing(ish).

If you want to find negative signals, they’re out there, but in each case, “it’s not so bad.”