Consumer Check-In & AI’s Progress
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Are consumers still strong enough to sustain the economy?
Is the consumer all right? Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm Travis Holm. I'm joined today by Lou Whiteman and Dan Kaplinger. Guys, I think we've got a lot of AI news. There's interest rate news. But I want to start with something that's maybe a little bit more close to home for regular people. And that is, is the consumer all right? Consumers still drive about 70% of the economy. Federal spending data, as Lou keeps reminding me, is not actually all that bad. But you start looking at consumer goods stocks and these earnings reports, and things look a little less bright. Lennar said this week that their new orders for new homes were down 9%, and prices are actually down 30% from a year ago.
I know they may be building a little bit different houses, but there's a lot of things that go into that. But that's a pretty big number. Nike's sales were down last fiscal year and both Hoka and Ahn reported weaker than expected results and lowered guidance. And GM said sales have fallen 6.8% early this year. Escalade sales are down 18%. Tahoe is down 8%. Suburban down 18%. Lou, it seems like things are a little weaker than we would like in the consumer space. Am I reading this
right? Well, I don't know how to read this, because for one, you have the whole macro micro issue. We'll get that in a second. But look at the data you just cited. The GM sales were the first half of twenty twenty six. That's not current. OK, it's it's not without value, but it's not current on holdings. Yeah, they aren't as doing as great as they were before. On Holdings is like 2% of the U.S. shoe market. Well, if you want to
talk about Nike,
they're a much bigger percentage and they're doing worse. Well, Nike too, but yeah, but I mean, I haven't seen a lot of barefoot people, so I do think people are still buying shoes. U.S. home sales, long running issues there. I don't think that is a new, it might be getting worse, but... Let me give you some counterpoints, too. U.S. retail sales were up 1.2% in August. That's the biggest jump in five years. Bank of America credit card data shows households spending up 4.5% year over year. Now, some of that might be inflation. I'm not saying the consumer is healthy, but the point is that they are somehow able to spend more than they did. Labor market remains quietly solid, if not unspectacular. Always come back to this, but I think it's so important to say the consumer.
We talk about the consumer, but the consumer is not one guy. It's not one family. It is the aggregate of 130 million plus U.S. households. Some of those households are struggling. And yes, I'm guessing some of those households are struggling more than two years ago. And I don't want to be dismissive of that. We are not trending in the right direction. But as long as there is a critical mass among those 130 million households that are business as usual, spending what they spend, the consumer is fine, even with the stresses. So two things can be true. A lot of brands, especially brands that are selling premium products, are finding it harder to sell those products today. Yet, the economy, the consumer is kind of somehow humming along.
Dan, one of the reasons that I brought up the names that I did is Lou has been talking about this K-shaped economy for a while. And a lot of those brands that I talked about are the top of that K. They were the people that are supposed to be doing well, the people who are buying Escalades, the people who are, you know, and I use the SUVs because that's where the money is made in the auto business is still those, you know, big, expensive SUVs and trucks. There's more deals on trucks. I talked about all the SUVs and sales are down. So it seems like if we have a K-shaped economy and the part of the K that's doing well is not doing nearly as well as it was a year ago, that's something.
Agree. But I wonder if we're starting to head more towards maybe, I don't know what you'd call it, an E-shaped economy or something like that, where that top end of the K kind of breaks into a couple of different... We
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Chapters
8 chapters
1
Are consumers still strong enough to sustain the economy?
0:02–11:18
2
How are rising interest rates affecting home‑builder earnings?
11:18–15:35
3
What are the biggest AI headlines this week and why do they matter?
15:35–19:38
4
Which apparel and footwear stocks are most vulnerable after a 50%+ drawdown?
19:38–23:10
5
What should investors look for when evaluating home‑builder fundamentals?
23:10–27:19
6
Which restaurant chains have the best chance to rebound from deep price drops?
27:19–31:52
7
How are auto manufacturers coping with tariffs, fuel costs and higher borrowing rates?
31:52–35:40
8
What does the end of an era at Berkshire Hathaway mean for shareholders?
35:40–38:53