2021 Is The Year Of The Consumer

Obviously, much of Gen Z isn’t old enough to get a credit card. This just includes those who are old enough. On the other hand, Boomer spending growth is -11.5%. We are weeks away from seeing that go positive. Obviously, the comps will be very easy. More important, spending on travel is about to bounce back. Hospitalizations have fallen by more than half since the peak in January.

We are extremely confident there will be a massive boost in spending sometime starting this spring or summer because there is a large savings glut and because of the fiscal stimulus. As you can see from the chart below, the difference between disposable incomes and consumption is very large. We just need an “all clear” sign to allow the pent up demand to work its way through the economy.

Oil About To Be In A Deficit

Some commodities investors didn’t think oil prices would spike this early because the commodity is still in a glut. Furthermore, there hasn’t been a sharp return in flying yet. However, oil has gotten above $60 for a few days. It has been helped by the cold weather in Texas. As you can see from the chart on the left, the year-over-year surplus is down 79% to 18.9 million barrels. It fell another 29% this past week. The Big 3 is oil, gas, and distillate. The Big 3’s year-over-year surplus is down 77% to 36.8 million barrels. It fell 18% this past week. With the surplus at 0, WTI has been at $62 on average. When the surplus has been in the high 30,000s, WTI has averaged about $55 per barrel.

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