The consumer is in trouble.
Right now, 63% of Americans are now living paycheck to paycheck. That’s up from 60% in October. “Americans are cash-strapped and their everyday spending continues to outpace their income, which is impacting their ability to save and plan,” said Anuj Nayar, LendingClub’s financial health officer, as quoted by CNBC.
On top of that, November retail sales fell sharply, even as inflation cooled. Sales at retail stores, online stores, and restaurants dropped 0.6% for November.
Worse, analysts at Citi warn the economy could lose up to two million jobs in 2023.
“We believe that the Fed’s rate hikes and shrinking bond portfolio have been stringent enough to cause an economic contraction within 2023,” they said, as quoted by Fox Business. “And if the Fed does not pause rate hikes until it sees the contraction, a deeper recession may ensue.”
None of that is good news at all. But it’s not surprising, unfortunately.
And that’s because the Federal Reserve backed us into a corner, having ignored the realities of inflation for as long as they did. Now, we’re in this mess.
Sure, it’s bad. But it’s also tradable. In fact, as we’ve been saying for months, prepare for volatility with the following:
Pro Shares Ultra VIX Short-Term Futures ETF (UVXY)
As the VIX pops, so does the UVXY ETF.
The Volatility Index and the UVXY ETF could see higher highs. All thanks to uncertainty about what could possibly happen next. For those of you that are new to the UVXY, the ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index. As the VIX moves higher, the UVXY typically follows.
iPath S&P 500 VIX Short-Term Futures (VXX)
The VXX ETN provides exposure to the S&P 500 VIX Short-Term Futures Index.
ProShares VIX Short-Term Futures ETF (VIXY)
ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration.