Consumer spending has remained strong since the pandemic. However, signs that demand has been weakening have surfaced in recent months. In addition, the sharp slowdown in US hiring data and concerns that the Fed is moving too slowly to cut the cost of borrowing have sparked fears of a hard landing. This led to a global stock sell-off in early August. Determining the trajectory of consumer spending with high-frequency alternative sources can offer investors a timely advantage for anticipating the probability of a recession. In this report, we summarise these dataset types and highlight where they can be found.

overview

In recent weeks, Fed chair Jerome Powell has been criticised for being too slow to cut interest rates. The Fed may benefit from using more timely alternative substitutes instead of relying on slow-moving economic data to shape monetary policy decisions. Using alternative data would enable policymakers to react more quickly to deteriorating economic conditions.

Two-thirds of the US economy is driven by consumer spending – a sector that has seen strong growth in the availability of alternative datasets relative to other sectors.

Investor interest in datasets that help assess the state of consumer wealth and the economy's overall health has grown in recent weeks. We summarise these datasets across the following categories:

• Transactional data – This includes point-of-sale (POS), credit/debit cards and e-receipt data.
• Wages – Sourced from job postings, government databases, salary surveys and various other sources.
• Delinquencies – Vendors in this space collect data from lenders, loan providers and other lending institutions. 
• Other dataset types – A broad spectrum of other alternative datasets exist that can help gauge the state of consumer health. We outline other popular alternatives in this section.