Green Star Products, Inc. (GSPI)

Daily Spotlight: Household Finances in Good ShapeA combination of pandemic-related factors (such as economic shutdowns and aggressive fiscal spending) have resulted in a sharp improvement in household finances. The Federal Reserve keeps track of Household Debt Service Payments as a Percent of Disposable Personal Income. This metric (the lower the better) was 9.9% prior to the pandemic and is now at 9.3%. During the depths of the pandemic, when households were receiving stimulus checks while sheltering in place, the ratio dropped to 40-year low of 8.4%. The average debt-service payment level since 1980 has been 11%. The high-water mark was established during the Great Recession (4Q07 to be exact) at 13.2%. We doubt households will be eager take on much more debt in coming quarters, as inflation is high and interest rates have risen, increasing the cost of debt to households while unemployment is still low. We do think the sound condition of household finances is an important indicator signaling that the consumer sector of the economy should continue to expand through 2022.