Jim Cramer explains why retail stocks are suffering with savings chart

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Certain stocks have been immune from the downturn, but the benchmark retail ETF is down nearly 20% over the past eight months.

A combination of factors have led to falling profits, weaker earnings and loss of interest from investors who have driven the SPDR S&P Retail ETFThe holiday season is the most important quarter for most retailers as shoppers flock to stores to pick up gifts for friends and family.

Household liquidity in the U.S. has fallen from its peak of $3.4 trillion — thanks to pandemic stimulus packages and changed spending habits — to $1 trillion now, according to a recent JPMorgan note which predicts that American's savings"should largely be exhausted by 2024. Importantly, even as of 2Q23, nearly all the inflation adjusted excess cash sits with the relatively affluent .

This is the"cushion" but remember wages are higher and inflation is not running as hot so there still is a 2019 like scenario... But it is why all the T&E and retailers save Costco, TJX, WMT and AMZN can't lift . Great chartThe U.S. personal savings rate reached a record high of 32% in April 2020 after averaging just 8.5% between 1959 and 2023, according to Trading Economics.

U.S. stocks edged lower in early Tuesday trading, with major indices on pace for the worst monthly performance of the year as high interest rates, mounting geopolitical risks and softer-than-expected earnings from mega-cap tech stocks hold down gains. Investors found some relief from the recent surge in Treasury bond yields late Monday, however, with the moves spilling over into the Tuesday session, following a smaller-than-expected $776 billion borrowing target issued by the Treasury.

 

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