We know when Walmart or Dollar General are doing well, those are not good signs for the health of the consumer economy, particularly when it’s higher income shoppers suddenly appearing in bigger numbers. But when that hard hit traffic starts spilling over to the local pawn shops, it’s a whole other level. Canaries and coalmines. Here’s the thing. We’re not only seeing that happen, the data backs this up, including a whole bunch which released earlier today. Eurodollar University&#x27;s Money &amp; Macro Analysis ----------------------------------------------- What is a Eurodollar University membership? It’s where understanding the monetary world isn’t a mystery—it&#x27;s a method. If you’re serious about your financial education and want clarity in a world of volatility and massive uncertainty, you’re in the right place. Ready to explore? Master monetary systems – past and future - with structure, clarity, and confidence. Visit https://eurodollar.university/membership ------------------------------------------------- Pawn shop economy https://www.msn.com/en-us/money/topstocks/pawn-shops-are-seeing-something-the-stock-market-isn-t-and-it-has-economists-concerned/vi-AA21Rt7f Powell Press Conference Transcript and Video https://www.federalreserve.gov/live-broadcast.htm https://www.eurodollar.university Twitter: https://twitter.com/JeffSnider_EDU

Pawn Shops Just Issued a Very Grim Warning About Consumer Behavior

Eurodollar University

# Full Transcript

**Podcast:** Eurodollar University

## Participants

- **Jeff Snider** (Eurodollar University)
- **Michael Goldstein** (None)

## Transcript

Now we know when Walmart and Dollar General really start doing well, that's not a good sign for consumers or the overall economy, particularly when it's higher income shoppers that are coming flooding into those stores. But when that traffic starts to spill over to local pawn shop, that's a whole other level. We're talking about canaries and coal mines here. But here's the thing. We're not only seeing that happen, the data, including a whole bunch that we got today, is backing it up.

More negative real incomes and a plunging savings rate that has suburban women using their jewelry as collateral for short-term pawn shop loans. It really is the Walmart signal only one step further into distress. Trading down to discount stores is one thing, but having to hawk personal items to be able to pay for groceries and gasoline is not what you want to see for the overall economy.

The latest figures from the Bureau of Economic Analysis explain perfectly why this is happening more and more. Price adjusted private incomes, which is the best proxy for the working economy, they declined once again in March, which was the second straight contraction, the third in four months, and the fourth time over the last half year.

It was enough to turn the six-month change there negative by the most in years, a rare signal of distress, which proves consumers are falling further and further behind as the lack of income once again clashes with rising expenses, just starting with gasoline. And because Americans were paying more for gas and not getting paid enough to absorb that hit, the savings rate plunged to 3.6%, which is the lowest in three and a half years.

Thus, Walmart, Dollar General, and now collateralized pawn shop loans. When there aren't enough jobs, there's just not going to be enough income. It's the same forgot-how-to-grow story, only with jobs now being lost, and along comes an energy shock to make everything that much more difficult. And keep this in mind as we go forward here. The BEA data, the income statistics, are just for the month of March.

Kind of shudder to think what they might be in April, though I would wager a guess the pawn shops already know. Now, you always want to be careful with individual stories, even when it's not just one or another. The old adage is that the plural of anecdotes is not data, and that remains true. But in this case, we start with the story that builds upon others that we've seen, and then get the data which backs everything up. Now, we've been talking about Walmart and the Walmart boom for over a year now.

When flat beverage first showed up, which just means demand for workers among employers dropped low enough, some businesses went beyond their hiring freezes and started to cut back on the number of employees. That's where the negative payroll months really ca...

Pawn Shops Just Issued a Very Grim Warning About Consumer Behavior

Transcript

Built for investment professionals

Every day you wait, your competitors are finding
edge in conversations you're not hearing.

Pawn Shops Just Issued a Very Grim Warning About Consumer Behavior

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.