33% Don’t Have $100 Saved

It wasn’t hard to foresee that there would be some sort of fiscal stimulus package passed by the government. People are losing their jobs quickly and need a lifeline. The most interesting data that defines this situation comes from Campbell Soup. The firm stated Campbell soup sales were up 59.3%, Prego pasta sauce sales were up 52.9%, and Goldfish crackers sales were up 22.7%. This sales growth is coming from people hoarding groceries partially out of fear and partially because they are eating out less. In keeping with this point, discount store same store sales growth is 20% higher than department store sales growth according to Redbook. This is by far a record high.

Consumers are in trouble. Not enough people have the savings to deal with losing their jobs. COVID-19 re-teaches us the lesson that we should have 3-6 months of savings and some cash in our investment accounts. Many people are having trouble investing at lower prices because their paychecks are shrinking or being eliminated. Obviously, getting the best prices on stocks isn’t nearly as important as people simply surviving without a job. Recessions aren’t always predicted and surprise many, but this was the sharpest one of all.

As you can see from the chart below, 33% of respondents in a Hedgeye survey had less than $100 to deal with job loss. The unfortunate reality is people have a tough time saving because of income limitations. We won’t be lecturing people for not saving. Instead we will say in the future if you have excess capital, use this as a reminder to put it in a savings account for a rainy day.

The fiscal stimulus for consumers can’t come soon enough. The shutdown has been about a week and affects about 50% of the US population. The final deal agreed on in the early morning on Wednesday was $1,200 per person, $2,400 for married couples, and $500 per child. The amount gets phased out when a person reaches the $75,000 annual income threshold.

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