High inflation or ... high inflation?
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What are the current challenges facing the American consumer?
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In Los Angeles, I'm Kyle Risdell. It is Wednesday today, the 24th day of June. Good as always to have you along, everybody. We've got some data coming this week. May inflation in the form of the Personal Consumption Expenditures Price Index. That is tomorrow. And then on Friday, the University of Michigan's Index of Consumer Sentiment. And that, which is to say consumers, which is to say us, is where we are going to start with Heather Long. She's the chief economist at Navy Federal Credit Union, also one of our Friday regulars. Hi, Heather. Hi, Kai. Glad to be back. So, look, somebody wakes you up at 2 o'clock in the morning from a dead sleep and says, Heather, what is the mood of the American consumer?
And without having a chance to check any of your data, what would you say? Well, I think after I maybe sock them, I would probably say the moon is still really gloomy. And I think the big thing that's going on that people are missing is while a lot of the consumption data still looks pretty darn robust, there's this massive psychological tax on the middle class right now where they feel and they have to financially make every dollar stretch to the furthest possible. And that's why the sentiment is so low. It's this, I got to find the cheapest gas station in town. I need to reset my thermostat so my electric bill isn't soaring again. And I need to shift my spending from the nice grocery store to the warehouse or the discount store.
It's that pressure people feel to be able to even do what they were doing without much thought a few years ago. Okay, so now I'm going to let you dig into your knowledge of the data that you guys have at Navy Federal. And what are we seeing consumers stopping doing and starting doing? You went over some of them, but clearly consumers are still spending. But I guess the point is they're changing the way they're spending and what they're spending on. Exactly. It's a big shift that's going on under the surface. I want to be clear, this is for the middle class. The top 20% earning $170,000 above, they're fine. They are spend, spend, spend money. whatever. This is really folks in the middle. And what's really apparent is two big trends.
Number one, this value and discount hunting, so this massive shift to spending at places like Costco and Sam's Club. And the second trend that's going on, a lot less spending on the home, so whether it's home furnishings or gardening. And because people still want to prioritize... entertainment spending and they want to do go to that concert or go to that world cup maybe that's a little bit too much of a stretch but they want to be part of those one-time splurge experiences still
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Chapters
7 chapters
1
What are the current challenges facing the American consumer?
0:00–5:11
2
How are inflation and consumer sentiment connected?
5:11–9:20
3
What is the impact of falling oil prices on inflation?
9:20–14:38
4
How does the housing bill affect small mortgages?
14:38–19:36
5
What trends are emerging in summer travel plans?
19:36–23:52
6
How are direct-to-consumer brands adapting to market changes?
23:52–28:51
7
What is the significance of the bond market in today's economy?
28:51–29:12