00:00I just want to get right to it, particularly with the numbers with regards to expectations.
00:05Present situation, that index actually rose 6.8 points to 121 and change, but the expectations
00:13index fell about six points down to 68 and change. That's a pretty huge disparity. Why?
00:20Yeah, so the Conference Force Consumer Confidence Index is made up of those two subcomponents. How
00:25are people feeling right now about their present situation? And then what are their expectations
00:31for the next six months? Interestingly, they're feeling kind of okay now. There's relatively
00:37full employment. Their wages are good. They're rising. Their paychecks are coming in. They're
00:44making their payments. But they're worried about the future. They see this inflation coming,
00:49and it's starting to wear on them. So it's gas prices. It's food prices.
00:54And as we know, oil not only impacts gas, but it impacts plastics, rubber, pharmaceuticals,
01:03makeup, 6,000 different consumer products. So you have rampant inflation. Then you've got the
01:08two wars that are going on in Ukraine and Iran with seemingly no end, trade issues. It just goes
01:15on and on. So they're worried about the future, and that's the big disparity. Okay, we're good now,
01:20but where are we going? Well, it raises a question, too. I mean, is this just sort of
01:25a real turning point in, I guess, what we can expect out of consumer behavior? Or is this just
01:31more people's anxiety just sort of being reflected in those numbers right now?
01:36It's a really good question because, as we know, 70% of our economy is based on the consumer. So
01:43this is
01:44an important thing. And right now, their debt levels at $1.3 trillion are as high as they've
01:50ever been. They're worried. The majority of consumers will say that borrowing costs will go
01:56up. They think interest rates are going to rise, which means their credit card costs are going to
02:00go up, their car costs are going to go up, their mortgages are going to go up. So I think
02:05this is what
02:06they're worried about. And when you've got about half the country living paycheck to paycheck,
02:12if this keeps happening, inflation keeps going, they're not going to be able to afford things.
02:17Right. So do we have an understanding of how this actually trickles down into consumer spending,
02:24into economic growth? Because a lot of times, what consumers say is not necessarily
02:30what they're always doing. Yeah, it's true. They don't always do what they say. But look,
02:38you know, these are economics, right? I mean, they're coming to the end here of their flexibility
02:43with debt and their costs are going up. They're worried. You know, when you've got people living
02:48paycheck to paycheck and the huge number of households that are doing that, there isn't a lot
02:52more here. So if this keeps going, you know, what's going to happen? And that's what they're worried
02:56about. We can deal with it the way it is right now. But if inflation starts going any more than
03:02where we are, if interest rates rise anymore, we're in trouble. That's what they're telling us.
03:07I do want to get your thoughts on, you know, one of the data points here, that the confidence was
03:12highest for survey respondents under 35. What do you make of that? Yeah. You know, I think that,
03:20you know, those people are largely in single person households. They're taking care of themselves.
03:25A lot of them living at home. You know, it's a different generation. And they don't have the
03:33same kind of worries. They don't have families and mortgages and car payments the same as,
03:37you know, people who may be later on. That's what we chalk it up to more than anything.
03:43You know, there are regional differences there, you know, where the costs are higher. You see that
03:47on the coast, you know, the confidence is lower. But that is an interesting point. And
03:55we'll see how that plays out. They aren't the biggest spenders in, you know, of all the
04:00generations. Well, I'm curious, Steve. I mean, we had you on this program, I think about three weeks
04:04or so ago to talk about CEO confidence, which wasn't great, but it was rising back above that
04:1150 level. And I'm curious, does it matter that we're seeing a CEO and corporate confidence going in
04:19one direction and maybe consumer confidence going in the other?
04:22Yeah, consumer confidence has been drifting down since the end of 2021. CEO confidence,
04:28you know, took a big hit here with the war and the situation with oil, supply chain and so forth.
04:35You know, CEO confidence is barely above neutral, you know, at 52. And, you know, now we've got the
04:42consumer confidence still drifting down. If they if if the consumer confidence continues to drift down
04:48and you see them cut spending, then you will see CEO confidence go down because, of course, their
04:55their sales will go down. So this is all intertwined.
04:58Well, I mean, maybe you could put your old retail CEO hat back on. And I know Office Depot and
05:04AutoZone
05:05probably a little bit more necessity than discretionary for for a lot of folks out there. But when you look
05:10at a report like this or really the string of reports that the conference board has put out here
05:14heading into what is supposed to be the time of year where most retailers do pretty well here,
05:20do you look at this report and think to myself as a CEO, I've got to cut prices or cut
05:25inventory or do
05:26something to adjust to what might actually come? Yeah, most retailers are looking at the holidays right
05:33now. And you've got most inventory on the water by now in order to get into the system through the
05:39ports into the system. So everything's been ordered. I think you're going to see people going, OK, well,
05:44if this is where we're at, we're going to have to start promoting faster and earlier. So I think
05:51Christmas is going to start in October this year. And and we'll see. You're going to have sales all
05:56through. They got to get the Halloween stuff out out of the way first, which, by the way, in my
06:02neighborhood is already up in some of the stores for some reason. Yeah, it's a great American holiday now
06:06and a wonderful retail holiday. But, you know, you're going to have to watch retail margins this
06:12this this this holiday season.
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