More U.S. Households Tap Bankruptcy Lawyers As Consumer Spend Dips

According to Bloomberg, the economy is already tapping out due to the erratic nature of macroeconomic conditions. Households and investors are responding in their corresponding ways, but the consistent theme running across both is a pullback from assets. Investors hoard cash even with a seemingly temporary reprieve from tariffs.

For their part, individual families and households are pivoting from costly assets and business operations, as evidenced by an increase use of bankruptcy or bankruptcy lawyers. Per Bloomberg, we relay a quote from chief strategist at QI Research:

Danielle DiMartino Booth, chief strategist at QI Research, is watching an index that screens how many households are tapping bankruptcy lawyers. It’s already at the highest since the pandemic.

“Lending standards are tightening, getting clamped down, mortgages are being rejected, refinancing applications are being rejected and there’s no fiscal stimulus,” she said.

DiMartino Booth is telling clients who want equity exposure to add high dividend and defensive stocks, while touting Treasury bills along with high-quality corporate bonds with limited interest-rate risk.

The above quote shows how investors whose job it is to be in the know are greeting new market conditions. Tracking everything from credit card purchases to housing mortgage applications, these fund managers are betting on a broad downturn that questions hefty consumer facing company valuations. In this context, blue chip companies, like Apple and Nvidia, can be expensive despite the strong market winner theses underlying both.

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And, the real estate investor influencer crowd is essentially singing the same tune.

Return to office turned many would be real estate investors into domestic migrants who were over leveraged. Their jobs were at stake and many simply opted to return to their headquarters leaving behind their COVID era economic footprint. Thus, many markets are feeling one aspect of this pinch in now decelerating housing sales and flat housing prices.