WEBVTT
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70% of our economy starts to go away and companies start laying people off, that's when we may be in trouble.
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AI is here to stay and it's here to take our jobs away.
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The dollar store said that nowadays, the majority of their customers make six figures or more a year.
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And our age of a first-time home buyer is now 40.
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And in 2019, it was 33.
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Wow, what a difference.
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One of the trends, the divergence of what we call a K-shaped economy.
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Their stocks have gone up in the last few years, and so they have a wealth effect.
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Tariffs are here to stay.
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They're not going anywhere.
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We're still in the thick of it.
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Welcome to the Money Signal podcast from Main Street to Wall Street.
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Today I am joined by Erin McLaughlin for a very interesting conversation around consumers, which, as many of you know, is a passion of mine.
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I am honored to have you on our podcast, Erin.
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Thank you.
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Before we get into the consumer conversations and statistics, which I love, I'd uh love for you to introduce yourself to our audience.
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Sure, absolutely.
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Um, well, I'm Erin McLaughlin, and I work here in New York City at the Conference Board.
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We are very well known for our consumer confidence index, and I am one of the senior economists there.
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I don't work directly in the statistics on the index, but I translate it, you know, for the media, for our members, who are usually Fortune 500 companies and other institutions, and also in the media.
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And so, you know, we'll be talking about that today.
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My background is actually previous to the conference board, was deep in infrastructure and commercial real estate.
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Oh.
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So that's why I thought it might also be interesting for us to talk a little bit today about how consumers interact with the built environment.
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And that might be interesting too.
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I love that.
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Welcome.
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Uh, pleasure to have another uh data strategist on the podcast and talk some statistics and geek out a little bit.
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Uh so for context for our audience, uh, you analyze economic data points and you analyze consumers and how they impact the economy.
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Yes.
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I analyze the consumer sentiment and consumer conversations on social media and how they impact brands or how they impact general trends from a marketing perspective.
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So today I was thinking, why don't we actually start with the latest consumer report that just came out?
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Right.
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Would you like to break this um down for us?
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I would.
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So we produce the Consumer Confidence Index on a monthly basis, and it's very interesting to see how it moves every month.
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And we ask a set of consumers how they feel about not just purchasing goods, but also purchasing services, how they feel about the labor market, and how they feel about sort of the general business environment.
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So it sort of goes a little bit beyond just, you know, what they plan to buy.
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What we've seen is really what us economists call range-bound activity, which is fairly negative.
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So, you know, when a news point comes out that sort of goes down, we often see a little bit of a dip.
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Sometimes if if folks are feeling a little better, it swings up a little bit.
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And it came up a tiny bit.
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It came up 0.8.
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So in March it was 91.8.
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Um, but generally we're still sort of in negative territory.
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Um, and that's generally because consumers have been feeling pressure from tariffs over the last year.
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Um, they're seeing a stable labor market, but they're sensing because of a lot of the geopolitical uncertainty.
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Now we're sort of beyond tariffs, into the war with Iran and inflation being persistent, that things maybe are not fantastic, but they're resilient.
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You know, consumers have still been spending.
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The US consumer is indeed very resilient.
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How is the study done?
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Is it survey-based?
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It is survey-based, yes.
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What's the sample size?
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The sample size um is uh around a thousand, and it's very interesting because we also have them write in comments.
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Okay.
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And so sometimes that's where consumers reveal themselves.
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And it's interesting to see tariffs were a big part of the comments before, and now gasoline prices and the effect of the war in Iran, which covered certainly some of the survey period in March, were part of the comments as well.
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That's fascinating to hear.
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And I'd love to read to you of some of my statistics from the social media end.
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And I'd love for you to weigh in from your point of view.
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Okay.
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So you just mentioned tariffs as one of the big things that has been bothering the US consumer.
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What I've seen in the data set over the last over 12 months now that I've analyzed is that is actually true.
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The top concerns for the US consumer in the last 12 months have been tariffs and inflation.
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Okay.
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So in the last 30 days, mirroring your report, because I mirrored the dates, uh, the US consumer on social media has talked about tariffs with over 9 million mentions.
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Oh wow.
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English language only.
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So if you put that in the perspective of obviously, say, I don't know, the census is uh, I believe 330 million population at the moment, uh, with uh comprising of 172 million households or something close to that.
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So we have nine million just in 30 days talk about tariffs.
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And the data signals, because we love talking about signals here, is that actually negative sentiment rose by 20% month over month.
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Wow.
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So it's a prior month.
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Okay.
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So in in your um report, what specifically did you see that consumers pointed out when it came to tariffs?
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When it comes to tariffs.
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So it's interesting because we really see it comes down to sort of what I would call like optional spending, you know, when it comes to if you're going to buy a television, if you're gonna buy a new car, if you're, you know, obviously some of those things are everybody needs a car to get to work, for example.
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But perhaps you're gonna trade down, you're gonna buy a used car instead of a new car.
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And so I think that that's where the sort of the purchase of goods versus services is where we've seen a lot of the mention and the concern around tariffs.
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I think what's really fascinating from sort of a from our point of view, from sort of a Wall Street or macroeconomic perspective, is that everybody thought that tariffs were going to sort of enter the inflation and the cost of goods earlier because we had, you know, we're we're just right around um Liberation Day, the one year anniversary of Liberation Day.
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But we didn't really see tariffs fully implemented and baked in until much later.
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And even now, a lot of companies are not passing them on.
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So at the conference board, we forecast that this first half of 2026 is when consumers are really gonna see the price increases from tariffs.
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Very interesting.
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Does that have to do anything with uh the current trade uh conversations too?
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Yes.
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In the sense of obviously you mentioned the war and and we have I think some of it is that companies know that their consumer bases are sort of exhausted from inflation.
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They were exhausted from the inflation that occurred after COVID.
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They're really cognizant of prices, especially for things that they buy all the time, like groceries, pet supplies, those kinds of things.
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And so they're hesitant to pass the tariffs along if they thought, well, maybe they won't stick.
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And then we saw that Supreme Court decision come out and say that the EPA tariffs, you know, were not held up, but the administration came out and said, okay, well, you know what?
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We found this other sort of rule that we can put tariffs on for five months, aka 150 days, while we do a study, a different kinds of studies, and then we'll have tariffs that are based on what are called section 232 and 301, which essentially means tariffs related to national security and unfair trade practices.
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And those have generally stood up over time.
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And so tariffs are here to stay, they're not going anywhere.
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And so that's in part why I think that, you know, we're still in the thick of it.
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We're still sort of at the at the at the peak of that one-time quote unquote hit.
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Very interesting.
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What about services?
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So, cost of goods obviously is impacted by tariffs and obviously other things.
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But when it comes to services, what are those things that consumers in the US complained about?
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Well, it's interesting because even, you know, 10 years ago or before, services didn't make up such a big part of our economic activity.
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And then, of course, we had COVID, where folks couldn't spend on services the way they did before.
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They were spending on goods, and that created a demand shock, and it created goods being a lot more expensive.
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Um, but folks really love to spend on services that are experiential.
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And I'm sure that you've studied that as well.
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So that's where travel, eating out, um, perhaps getting food delivered, um, and things that basically, and then sort of services related to health and beauty and wellness.
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And so we see consumers still really prioritizing that.
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In fact, eating out, getting food delivered, not necessarily cooking food at home, but doing that is still the number one service category that we see consumers saying that they plan to spend money on, which I think is really interesting because that's an easy way to cut back during hard financial times.
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Right.
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And I don't think the consumer's ready to cut back there yet.
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They like, they like to go to restaurants and they like their food delivery.
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Ease of convenience is very important, and comfort actually is something very important.
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As a mom, I can tell you that yes, getting my food delivered is definitely one of the higher priorities.
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I'm wondering what does that mean?
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What does it tell you from an economic perspective?
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So I keep on hearing my co-host Peter Tuchman, the Einstein on Wall Street, always talks about the economy, the market, how it's performing, and how it's affecting the broader economy in the US.
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When you look at the report, the consumer report, uh what does it really tell you in terms of where's the economy headed?
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Do you feel like outside of tariffs and obviously the consumer being more pressured in Q1 of 2026?
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Um, do you see like some kind of silver lining in all of it for consumers and the consumers actually spending more and helping the economy?
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Or where do you see that?
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Well, I think what's really interesting is that even if consumers feel a little negative, like your data shows, like our survey shows, they will continue to spend.
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But when they feel that the job market is really weakening, or they feel that they will lose a job, or they're sensing that people in their industry or their families, their friends are losing jobs, then they tighten up.
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So you can have negative feelings but still be spending.
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But when you think that your income, you know, is going to go away, that changes folks' perspective.
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And what we've seen is that even though the labor market is weakening over the last um few months and really a few quarters, we haven't seen the unemployment rate go up.
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So the unemployment rate is still at about 4.4%.
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And, you know, we have some demographic challenges because we have a very large population retiring with the baby boomer population, and we have policies that are, you know, really reducing or really almost eliminating immigration in our foreign-born workforce is getting smaller.
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And so even though there may be a mismatch between available jobs and available talent, we're still seeing a very stable labor market.
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But it's what econom economists call low hire, low fire, meaning it's stable, but we're not really adding a lot of jobs.
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And so that is making a lot of sort of Wall Street and other people a little bit nervous.
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Because if we're not adding jobs and we go through a weakening of the economy in consumer spending, which is 70% of our economy, starts to go away and companies start laying people off, that's when we may be in trouble.
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And so that's sort of a big part of what we look at, even though it's sort of in the background, that labor market component to the consumer confidence index and really to what's happening in the macroeconomy is a big part of that.
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And does the consumer confidence index uh report study sentiment, consumer sentiment, and and how that shifts?
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Do you guys also look at that?
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We do, and we ask uh the survey participants about their impressions of the labor market and of business conditions to see how that moves.
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And it's been fairly steady, but fairly negative, unfortunately, even though the spending is still pretty pretty strong.
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And what what has been that negative sentiment driver?
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What have you seen anything specific that comes out?
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It really is about public policy.
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You know, we're at a time where tariffs, geopolitics, going to war, Washington is driving the economic conversation.
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And Washington, in part, may drive, you know, how consumers spend.
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Now, one thing that I think will be interesting to see in the next um couple months is oftentimes around this time of year, we see a little bit of the consumer perking up because they get tax refund checks.
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And so, you know, and there's different statistics around that.
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So I'll be curious to see.
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You know, we do have some pressure on gasoline prices and some other um products, but it will be interesting to see if we see any sort of perkiness happen over the next couple months because people are getting getting some tax refunds.
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Right.
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Next month, I'm sure, will be uh maybe a different story.
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Maybe.
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When uh you mentioned the job market as something that the consumer confidence index also measures, and it's interesting to me for me to hear that there isn't so much worry around that based on the consumer findings, at least from this month.
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So, one of the things that I've seen on social media uh when I've analyzed consumer general consumer sentiment around employment has been AI.
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Oh, yes, that has been coming up over and over again, pretty much in every single analysis that I've done.
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And there's this big consumer fear that we see on social media among the US consumer that AI is here to stay and it's here to take our jobs away.
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What what do you say to the consumer uh you know, who is listening right now?
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Like, how should they think about you know the jobs and AI?
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I mean, it is really a big unknown for all of us, right?
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When you think about um will AI be a tool, you know, that sort of improves all of our lives potentially, makes us more productive, makes us more efficient, or is AI going to become an economist and write my reports?
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I mean, I don't know that an AI person can go on a podcast or an AI bot couldn't go on a podcast, but when each one of us probably thinks about our jobs and thinks about AI, there's part of our jobs, you know, that AI could do.
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Um, and so I think that there is probably reasonable concern all over the board, you know.
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I mean, AI is not going to deliver an Amazon package to your front door, but it could probably improve the process of getting an Amazon package to your front door.
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So, you know, I think we're in the early stages of really understanding what is going to happen.
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And we see that even, you know, with regards to data centers and infrastructure around AI and around sort of big technology.
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So I think we're in the early stages.
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I can definitely understand why folks um online and would have concerns because it's it is a great unknown.
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It's the next industrial revolution in many ways.
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And I'm sure we'll follow to see.
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Yeah.
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So besides good and services, what else does the consumer um confidence index measure?
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Um, well, we do also measure things somewhat related to age, which I'm curious to know, you know, what your data that you're measuring from social media also shows.
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So recently, in our most recent consumer confidence index, uh older folks, you know, um felt more negativity compared to younger folks.
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And it's sometimes it changes a little bit, you know, and it's not a dramatic uh difference.
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But I was wondering in looking at that, if older folks were perhaps responding to the hit to the stock market in the last month or so, because we really do see, in many ways, the economy showing up differently for wealthier who are often older consumers versus younger consumers who are still getting their footing.
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You know, one sort of good example of how this is showing up in the economy is, you know, I also focus, as I was saying, on uh infrastructure, the built environment, commercial real estate, and housing.
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And our age of a first-time home buyer is now 40.
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And in 2019, it was 33.
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Wow, what a difference.
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It's a huge difference.
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And a lot of that is because, well, we have a lack of supply of housing in the US, but we also have uh housing that is a lot more expensive.
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In some markets, housing prices have doubled since 2019.
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So, and we had low, low interest rates, and now we have higher interest rates, which are probably closer to normal and what they will be.
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And so that's really interesting because a lot of life, I jokingly always say, a lot of life is lived in your 30s, right?
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And the difference between 33 and 40, if you're getting married, having children, adding to your family is big.
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But it's also, and we know this from talking to our members, purchasing a house also drives a lot of consumer activity.
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Because often when folks purchase a house, they purchase furniture, they purchase appliances, they might purchase a second car.
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And we even learn from some of our corporate members, they also get pets.
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And they may have because they have a bigger house, they might be able to add to their furry family.
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And so owning a house or the process of buying a house or buying a new house also drives a lot of consumer activity.
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So having sort of this quiet housing market that's not sort of churning over like it used to, and that we're not adding residential has really meant that that's also probably dampening a little bit of consumer activity that we would have seen before.
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Well, that may be the fact now, but when we look at the audience of Gen Z and the demographics of Gen Z, while they are not preoccupied with buying a home, because obviously they're too young yet, they love going to shopping malls.
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So real estate for shopping malls, surprisingly, has actually changed dramatically over the last couple of years.
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I'd love to hear more of you had shared with me a very interesting statistics about that.
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I'd love for you to share with our audience as well.
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I think one of the things that's really interesting.
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Now I'm a little bit older.
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So I was a teenager in the 1990s, and that's what we went to the mall, because that's how you would see your friends, right?
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I mean, you see them in school or maybe activities, but we didn't interact on social media because social media didn't exist.
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So if you wanted to see your friends, you'd go to the food court, you'd go see a movie, you'd walk around the mall, or you know, especially because a lot of towns don't have quote unquote downtowns, you know, like they used to.
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Um, so I was really fascinated and, you know, following commercial real estate, we've had sort of the decline of the U.S.
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mall now for really 10 or 15 years.
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And that's largely due to online shopping replacing a lot of that purchasing activity.
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So I thought it was amazing to see that young, that young folks are like, let's get to the mall.
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But not only that, they're going to the mall and they're taking pictures and like putting them on TikTok or Instagram or what have you to show that they were at the mall.
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And, you know, it's really interesting in the sort of economic world or in the commercial real estate world, the discussion is not just like, okay, malls are back.
00:21:59.759 --> 00:22:06.400
But it's like what is going to make a mall attractive, right?
00:22:06.400 --> 00:22:16.319
So malls have sort of some of the malls that have saved themselves in the last few years have done it by attracting luxury consumers, right?
00:22:16.319 --> 00:22:24.000
Like back in the day, a mall, you could anchor it, you know, with a Macy's or a Bloomingdale's and get a lot of folks to the mall.
00:22:24.000 --> 00:22:27.359
But nowadays, sort of a lot of people shop at different stores.
00:22:27.359 --> 00:22:30.880
They're not necessarily interested in those big anchor stores in the same way.
00:22:30.880 --> 00:22:37.039
And so some malls have survived by sort of catering to that top quartile of shopper.
00:22:37.039 --> 00:22:40.319
But the conversation is really interesting.
00:22:40.319 --> 00:22:50.160
And I'm curious to hear what you're hearing from social media in the last, you know, six or 12 months about how young people, you know, feel they've rediscovered the mall.
00:22:50.160 --> 00:22:54.640
And so that's that's not your top quartile of shoppers next necessarily.
00:22:54.640 --> 00:23:05.759
So, you know, developers were thinking, okay, do I need to put up backgrounds and interesting things for or public art for like Instagram photo type opportunities?
00:23:05.759 --> 00:23:06.160
Right.
00:23:06.160 --> 00:23:14.960
Do I need to have like food or other sort of experiential things that speak to younger folks or social media presence?
00:23:15.119 --> 00:23:20.960
So and those are the future consumers giving us the survey uh responses.
00:23:20.960 --> 00:23:30.799
So the top three things that I've seen among Gen Z consumers in the US and why they go to the mall, because we analyzed that data, was to buy beauty products.
00:23:30.799 --> 00:23:39.519
That was the top category, actually, with some of the big large retailers like Sephora among those mentioned, um, Blue Mercury and a few of the others.
00:23:39.519 --> 00:23:44.480
The secondary one was actually apparel, which makes sense.
00:23:44.480 --> 00:23:45.119
Yes.
00:23:45.119 --> 00:23:50.640
And then the tertiary or the third one was entertainment, so movie goers.
00:23:50.640 --> 00:24:00.160
So there does seem to be a lot of that resurgence among the Gen Z consumers who are fueling our economy and making it stronger.
00:24:00.160 --> 00:24:00.720
Yeah.
00:24:00.720 --> 00:24:04.960
That they are very interested in going back to the mall to shop.
00:24:04.960 --> 00:24:05.440
Right.
00:24:05.440 --> 00:24:11.440
When we think of I love going back to the point of the economy and like again, where is the economy headed?
00:24:11.440 --> 00:24:13.599
Like, what are those things that impact us?
00:24:13.599 --> 00:24:22.160
From like the one, two, threes of whoa, this is scary coming up, to you know, maybe this is just normal at this point.
00:24:22.160 --> 00:24:27.039
What are those like things that you think are really impacting the economy right now?
00:24:27.039 --> 00:24:28.400
We talked about tariffs.
00:24:28.400 --> 00:24:28.880
Yes.
00:24:28.880 --> 00:24:34.319
We talked about the global trade war, which is comes with tariffs and the tariffs territory.
00:24:34.319 --> 00:24:36.640
We are talking wars.
00:24:36.640 --> 00:24:38.799
There's multiple wars going on right now.
00:24:38.799 --> 00:24:42.000
Are those really the key drivers of the economy?
00:24:42.000 --> 00:24:48.559
Or if what else is out there that could impact where the next 12 months will head into?
00:24:48.880 --> 00:24:49.839
That's a great question.
00:24:49.839 --> 00:24:54.480
So we forecast, we we do a forecast and we try to look ahead.
00:24:54.480 --> 00:25:03.680
Really, we try to look ahead five years, but it's very hard to look that far ahead, but we definitely are looking ahead, you know, at least one year.
00:25:03.680 --> 00:25:08.640
We measure economic activity, of course, through GDP and forecasting GDP.
00:25:08.640 --> 00:25:18.559
We do think that we will have a slower economy this year than we did last year and certainly the year before.
00:25:18.559 --> 00:25:35.359
Um, we do not think that we're going to enter into a recession, although the longer something like the Iran war happens and the higher we see gas line prices go, the greater likelihood that we would enter a recession.
00:25:35.359 --> 00:25:37.680
But a lot of that is about duration.
00:25:37.680 --> 00:25:45.039
And um, no one really has a strong sense of what the duration of this geopolitical conflict will be.
00:25:45.039 --> 00:25:50.079
But if it doesn't last super long, then it probably will not cause a recession.
00:25:50.079 --> 00:26:05.920
And tech there's no real technical definition of a recession, but most people accept um to geek out the NBER's definition, which is two quarters of negative growth that are really not just about one shock.
00:26:05.920 --> 00:26:11.359
So most likely we're not going to enter a recession, but we are going to have a slower economy.
00:26:11.359 --> 00:26:27.119
And I think a lot of that is does come down to just general uncertainty, you know, just hitting back on the topics that we've already even discussed: tariffs, geopolitical uncertainty, uncertainty around AI.
00:26:27.119 --> 00:26:40.319
So all of that uncertainty will just sort of could potentially contribute to, you know, a malaise for US consumers who decide, oh, I'm gonna rein in my spending a little bit.
00:26:40.319 --> 00:26:43.839
But again, that's a slowdown, not necessarily a recession.
00:26:44.240 --> 00:26:50.799
In terms of consumers who actually follow some of the consumer reports, there are several reports, obviously.
00:26:50.799 --> 00:26:52.960
Consumer confidence index is one.
00:26:52.960 --> 00:26:57.839
We have the CPI report, there's like different versions of the consumer report.
00:26:57.839 --> 00:26:58.319
Yes.
00:26:58.319 --> 00:27:04.480
What what uh what would you say basically when you collect these consumers for the survey?
00:27:04.480 --> 00:27:12.240
Like what's the one thing that you look for in the consumers who actually answer and respond for the consumer confidence index specifically?
00:27:13.279 --> 00:27:17.359
For the consumer confidence index specifically, we look at changes.
00:27:17.359 --> 00:27:22.240
So, which is kind of I think probably pretty typical of a survey.
00:27:22.240 --> 00:27:31.599
So we're really looking at how the change in the answer, you know, on a month over-month basis, year over year.
00:27:31.599 --> 00:27:37.440
And that's why, you know, we produce lots of charts and data and graphs, you know, that show.
00:27:37.440 --> 00:27:52.880
And it's really up oftentimes to, you know, leaders of corporation, those in the business community to probably decide some strategy based on consumers, you know.
00:27:52.880 --> 00:28:01.759
I think that one of the trends that we were talking about earlier that we've seen is sort of the divergence of what we call a K-shaped economy.
00:28:01.759 --> 00:28:10.000
So where we've had a lot of folks who are probably in the top, you know, quartile or top 10% of earners.
00:28:10.000 --> 00:28:19.200
Um, and they have they feel good, you know, their feelings about the economy are good because their stocks have gone up in the last few years.
00:28:19.200 --> 00:28:24.000
As we were saying, you know, the the price of housing and their equity in their houses have gone up.
00:28:24.000 --> 00:28:32.240
And so they have a wealth effect, you know, where they feel they feel wealthier and so they feel more confident spending.
00:28:32.240 --> 00:28:42.559
And the bottom third of sort of earners, folks, sort of in the economic spectrum might feel things tighter.
00:28:42.559 --> 00:28:57.920
And so that's another thing to sort of keep an eye on, and I think for a lot of decision makers, both you know, policymakers and corporate leaders, to keep an eye on, because some folks have said that a lot of our growth in our economy is really just coming from the top 10%.
00:28:57.920 --> 00:29:10.799
And that can be kind of tough because that's a small audience that does not necessarily show like a broad and strong economy if you're really only catering to the top 10%.
00:29:10.799 --> 00:29:29.039
So as we see some of these shocks, like the shock in gasoline prices or any other shocks like we could see with health insurance prices, that shock will affect folks at the bottom of earning and economic spending more than at the top.
00:29:29.039 --> 00:29:35.359
And so if they have to change their spending habits, you know, that's where we'll see things sort of show up.
00:29:35.359 --> 00:29:45.440
You know, one uh statistic that I saw was that the dollar store said that nowadays the majority of their customers make six figures or more a year.
00:29:45.440 --> 00:29:46.079
Oh, wow.
00:29:46.079 --> 00:30:03.920
Which isn't necessarily what people thought before, and that even Walmart and some stores that, you know, a lot of folks think cater to lower income or middle income folks are seeing a lot of higher income folks come in and purchase things because they want the value.
00:30:03.920 --> 00:30:06.160
They want bang for their buck.
00:30:06.160 --> 00:30:14.880
And so being able to sort of target certain demographics and understand their um their feelings about the economy are important.
00:30:14.880 --> 00:30:15.920
Very important.
00:30:16.079 --> 00:30:24.960
One of the statistics brings brings back some uh data statistics that I've analyzed was actually that uh the consumer is very value-driven.
00:30:24.960 --> 00:30:26.400
We've seen it over and over again.
00:30:26.400 --> 00:30:35.200
Anytime I've analyzed retail conversations, I consistently have seen in those last 12 months that consumers are value-driven.
00:30:35.200 --> 00:30:43.839
They're moving and shifting away from luxury retailers to the everyday retailers such as Walmart, such as Target, TJ Maxx.
00:30:43.839 --> 00:30:52.160
Obviously, we've seen it also in the print on Wall Street with some of the very successful earnings for companies like Walmart.
00:30:52.160 --> 00:30:56.880
Um, and it's interesting that you also mentioned healthcare.
00:30:56.880 --> 00:31:22.319
So, another topic I've also seen is that healthcare premiums and insurance conversations have spiked ever since the tariff announcement happened, because consumers have come with uh come out with a lot of concern regarding medical cost, regarding medication cost, right, and also regarding anything that has steel in it.
00:31:22.319 --> 00:31:23.759
So the steel and aluminum.
00:31:23.759 --> 00:31:26.559
Steel and aluminum, which goes into a lot of the medical.
00:31:26.559 --> 00:31:28.160
A lot of packaging, too.
00:31:28.160 --> 00:31:30.720
Right, medical devices that are made out of it.
00:31:30.720 --> 00:31:36.559
So it's interesting that you mentioned because again, the US consumer is pressured from every single angle.
00:31:36.559 --> 00:31:41.119
Now, another thing that you also mentioned is that the baby boomers are retired.
00:31:41.119 --> 00:31:41.519
Yes.
00:31:41.519 --> 00:31:44.000
Boy, that should I be concerned about that?
00:31:44.000 --> 00:31:45.599
What happens when they retire?
00:31:45.599 --> 00:31:48.079
I mean, aren't there like our worker force at the moment?
00:31:48.079 --> 00:31:49.039
I'm kidding.
00:31:49.519 --> 00:31:54.079
Well, it is interesting because we do see that change in the labor market.
00:31:54.079 --> 00:31:54.480
Right.
00:31:54.480 --> 00:32:00.640
So um I believe the youngest baby boomers maybe are in their 60s now.
00:32:00.640 --> 00:32:03.200
And so most of them will be retired.
00:32:03.200 --> 00:32:10.000
And then the generation after, my generation, generation X, is much smaller than the generations afterwards.
00:32:10.000 --> 00:32:21.200
So, you know, folks in retirement, as long as the stock market, you know, is still fairly strong, fairly resilient, they're still gonna spend money, probably.
00:32:21.200 --> 00:32:23.119
They'll spend it differently.
00:32:23.119 --> 00:32:37.440
Um, but definitely healthcare spending takes up more and more, you know, of folks' budgets, you know, and we see that in pharmaceuticals, as you were saying.
00:32:37.440 --> 00:32:39.920
And we also see that just in care.
00:32:39.920 --> 00:32:49.680
And so one thing that I think is really interesting to look at is not just health insurance, but also property insurance has really gone up in the last few years.
00:32:49.680 --> 00:32:51.920
And so these are must-haves.
00:32:51.920 --> 00:32:54.880
You know, you have to have generally health insurance.
00:32:54.880 --> 00:33:00.799
If you have a mortgage on your house, you have to have property insurance, you have to have automobile insurance.
00:33:00.799 --> 00:33:15.039
And so as these sort of required costs go up, we see that consumers might have to rein in some of their, you know, more fun optional spending, or like you were saying, look for value.
00:33:15.039 --> 00:33:19.119
Maybe instead of going to a more expensive supermarket, they go to Walmart.
00:33:19.119 --> 00:33:27.200
And I believe Walmart, besides being, you know, um non-perishable goods, I think is the country's largest grocery store as well.
00:33:27.200 --> 00:33:34.960
So I think that's where we see, I don't even want to call it trading down, but sort of more value purchases happening.
00:33:34.960 --> 00:33:36.000
Absolutely.
00:33:36.000 --> 00:33:39.119
Erin, thank you so much for the fascinating conversation.
00:33:39.440 --> 00:33:40.319
Thanks for having me.
00:33:40.319 --> 00:33:41.920
This has been really interesting.
00:33:41.920 --> 00:33:47.680
I appreciate all the knowledge that you shared and the consumer confidence index.
00:33:47.680 --> 00:33:53.920
I feel more educated and I'm excited to see what the next couple of months look for the U.S.
00:33:53.920 --> 00:33:54.319
consumer.
00:33:54.319 --> 00:33:56.400
It's not going to be boring, I don't think.
00:33:56.400 --> 00:33:58.000
I don't think so either.
00:33:58.000 --> 00:33:59.440
We appreciate your time.
00:33:59.440 --> 00:34:00.079
Thank you.
00:34:00.079 --> 00:34:07.119
To all of our viewers and listeners, make sure you follow the Money Signal Podcast from Main Street to Wall Street.
00:34:07.119 --> 00:34:10.800
Our official website is moneysignalpodcast.com.
00:34:10.800 --> 00:34:14.800
And our official social media pages are moneysignal.
00:34:14.800 --> 00:34:18.159
Stay tuned for more.
00:34:18.159 --> 00:34:19.280
See you soon.
00:00:00.160 --> 00:00:08.560
70% of our economy starts to go away and companies start laying people off, that's when we may be in trouble.
00:00:08.560 --> 00:00:12.240
AI is here to stay and it's here to take our jobs away.
00:00:12.240 --> 00:00:19.839
The dollar store said that nowadays, the majority of their customers make six figures or more a year.
00:00:19.839 --> 00:00:24.800
And our age of a first-time home buyer is now 40.
00:00:24.800 --> 00:00:27.920
And in 2019, it was 33.
00:00:27.920 --> 00:00:29.679
Wow, what a difference.
00:00:29.679 --> 00:00:33.840
One of the trends, the divergence of what we call a K-shaped economy.
00:00:33.840 --> 00:00:38.240
Their stocks have gone up in the last few years, and so they have a wealth effect.
00:00:38.240 --> 00:00:39.679
Tariffs are here to stay.
00:00:39.679 --> 00:00:40.799
They're not going anywhere.
00:00:40.799 --> 00:00:42.880
We're still in the thick of it.
00:00:45.920 --> 00:00:50.159
Welcome to the Money Signal podcast from Main Street to Wall Street.
00:00:50.159 --> 00:01:00.479
Today I am joined by Erin McLaughlin for a very interesting conversation around consumers, which, as many of you know, is a passion of mine.
00:01:00.479 --> 00:01:03.840
I am honored to have you on our podcast, Erin.
00:01:03.840 --> 00:01:04.239
Thank you.
00:01:04.239 --> 00:01:13.920
Before we get into the consumer conversations and statistics, which I love, I'd uh love for you to introduce yourself to our audience.
00:01:14.239 --> 00:01:15.280
Sure, absolutely.
00:01:15.280 --> 00:01:21.359
Um, well, I'm Erin McLaughlin, and I work here in New York City at the Conference Board.
00:01:21.359 --> 00:01:27.760
We are very well known for our consumer confidence index, and I am one of the senior economists there.
00:01:27.760 --> 00:01:41.280
I don't work directly in the statistics on the index, but I translate it, you know, for the media, for our members, who are usually Fortune 500 companies and other institutions, and also in the media.
00:01:41.280 --> 00:01:44.079
And so, you know, we'll be talking about that today.
00:01:44.079 --> 00:01:51.040
My background is actually previous to the conference board, was deep in infrastructure and commercial real estate.
00:01:51.040 --> 00:01:51.439
Oh.
00:01:51.439 --> 00:02:00.480
So that's why I thought it might also be interesting for us to talk a little bit today about how consumers interact with the built environment.
00:02:00.480 --> 00:02:02.159
And that might be interesting too.
00:02:02.400 --> 00:02:03.120
I love that.
00:02:03.120 --> 00:02:04.000
Welcome.
00:02:04.000 --> 00:02:11.520
Uh, pleasure to have another uh data strategist on the podcast and talk some statistics and geek out a little bit.
00:02:11.520 --> 00:02:22.240
Uh so for context for our audience, uh, you analyze economic data points and you analyze consumers and how they impact the economy.
00:02:22.240 --> 00:02:22.879
Yes.
00:02:22.879 --> 00:02:35.599
I analyze the consumer sentiment and consumer conversations on social media and how they impact brands or how they impact general trends from a marketing perspective.
00:02:35.599 --> 00:02:42.000
So today I was thinking, why don't we actually start with the latest consumer report that just came out?
00:02:42.000 --> 00:02:42.560
Right.
00:02:42.560 --> 00:02:44.879
Would you like to break this um down for us?
00:02:45.039 --> 00:02:45.520
I would.
00:02:45.520 --> 00:02:54.400
So we produce the Consumer Confidence Index on a monthly basis, and it's very interesting to see how it moves every month.
00:02:54.400 --> 00:03:09.280
And we ask a set of consumers how they feel about not just purchasing goods, but also purchasing services, how they feel about the labor market, and how they feel about sort of the general business environment.
00:03:09.280 --> 00:03:13.759
So it sort of goes a little bit beyond just, you know, what they plan to buy.
00:03:13.759 --> 00:03:21.039
What we've seen is really what us economists call range-bound activity, which is fairly negative.
00:03:21.039 --> 00:03:27.759
So, you know, when a news point comes out that sort of goes down, we often see a little bit of a dip.
00:03:27.759 --> 00:03:31.840
Sometimes if if folks are feeling a little better, it swings up a little bit.
00:03:31.840 --> 00:03:33.360
And it came up a tiny bit.
00:03:33.360 --> 00:03:34.560
It came up 0.8.
00:03:34.560 --> 00:03:37.520
So in March it was 91.8.
00:03:37.520 --> 00:03:42.319
Um, but generally we're still sort of in negative territory.
00:03:42.319 --> 00:03:50.479
Um, and that's generally because consumers have been feeling pressure from tariffs over the last year.
00:03:50.479 --> 00:03:59.360
Um, they're seeing a stable labor market, but they're sensing because of a lot of the geopolitical uncertainty.
00:03:59.360 --> 00:04:11.520
Now we're sort of beyond tariffs, into the war with Iran and inflation being persistent, that things maybe are not fantastic, but they're resilient.
00:04:11.520 --> 00:04:13.599
You know, consumers have still been spending.
00:04:13.919 --> 00:04:16.639
The US consumer is indeed very resilient.
00:04:16.639 --> 00:04:17.920
How is the study done?
00:04:17.920 --> 00:04:19.199
Is it survey-based?
00:04:19.199 --> 00:04:20.959
It is survey-based, yes.
00:04:20.959 --> 00:04:22.319
What's the sample size?
00:04:22.560 --> 00:04:30.160
The sample size um is uh around a thousand, and it's very interesting because we also have them write in comments.
00:04:30.480 --> 00:04:30.800
Okay.
00:04:31.199 --> 00:04:37.199
And so sometimes that's where consumers reveal themselves.
00:04:37.199 --> 00:04:53.920
And it's interesting to see tariffs were a big part of the comments before, and now gasoline prices and the effect of the war in Iran, which covered certainly some of the survey period in March, were part of the comments as well.
00:04:54.160 --> 00:04:55.920
That's fascinating to hear.
00:04:55.920 --> 00:05:01.519
And I'd love to read to you of some of my statistics from the social media end.
00:05:01.519 --> 00:05:05.040
And I'd love for you to weigh in from your point of view.
00:05:05.040 --> 00:05:05.279
Okay.
00:05:05.279 --> 00:05:11.600
So you just mentioned tariffs as one of the big things that has been bothering the US consumer.
00:05:11.600 --> 00:05:18.879
What I've seen in the data set over the last over 12 months now that I've analyzed is that is actually true.
00:05:18.879 --> 00:05:25.199
The top concerns for the US consumer in the last 12 months have been tariffs and inflation.
00:05:25.199 --> 00:05:25.839
Okay.
00:05:25.839 --> 00:05:39.759
So in the last 30 days, mirroring your report, because I mirrored the dates, uh, the US consumer on social media has talked about tariffs with over 9 million mentions.
00:05:39.759 --> 00:05:40.319
Oh wow.
00:05:40.319 --> 00:05:41.920
English language only.
00:05:41.920 --> 00:05:56.800
So if you put that in the perspective of obviously, say, I don't know, the census is uh, I believe 330 million population at the moment, uh, with uh comprising of 172 million households or something close to that.
00:05:56.800 --> 00:06:02.480
So we have nine million just in 30 days talk about tariffs.
00:06:02.480 --> 00:06:12.319
And the data signals, because we love talking about signals here, is that actually negative sentiment rose by 20% month over month.
00:06:12.319 --> 00:06:12.639
Wow.
00:06:12.639 --> 00:06:13.839
So it's a prior month.
00:06:13.839 --> 00:06:14.399
Okay.
00:06:14.399 --> 00:06:22.639
So in in your um report, what specifically did you see that consumers pointed out when it came to tariffs?
00:06:22.879 --> 00:06:24.160
When it comes to tariffs.
00:06:24.160 --> 00:06:44.480
So it's interesting because we really see it comes down to sort of what I would call like optional spending, you know, when it comes to if you're going to buy a television, if you're gonna buy a new car, if you're, you know, obviously some of those things are everybody needs a car to get to work, for example.
00:06:44.480 --> 00:06:49.040
But perhaps you're gonna trade down, you're gonna buy a used car instead of a new car.
00:06:49.040 --> 00:06:59.920
And so I think that that's where the sort of the purchase of goods versus services is where we've seen a lot of the mention and the concern around tariffs.
00:06:59.920 --> 00:07:24.240
I think what's really fascinating from sort of a from our point of view, from sort of a Wall Street or macroeconomic perspective, is that everybody thought that tariffs were going to sort of enter the inflation and the cost of goods earlier because we had, you know, we're we're just right around um Liberation Day, the one year anniversary of Liberation Day.
00:07:24.240 --> 00:07:29.600
But we didn't really see tariffs fully implemented and baked in until much later.
00:07:29.600 --> 00:07:32.720
And even now, a lot of companies are not passing them on.
00:07:32.720 --> 00:07:41.759
So at the conference board, we forecast that this first half of 2026 is when consumers are really gonna see the price increases from tariffs.
00:07:42.160 --> 00:07:42.959
Very interesting.
00:07:42.959 --> 00:07:48.639
Does that have to do anything with uh the current trade uh conversations too?
00:07:48.639 --> 00:07:49.199
Yes.
00:07:49.439 --> 00:08:01.360
In the sense of obviously you mentioned the war and and we have I think some of it is that companies know that their consumer bases are sort of exhausted from inflation.
00:08:01.360 --> 00:08:05.360
They were exhausted from the inflation that occurred after COVID.
00:08:05.360 --> 00:08:14.399
They're really cognizant of prices, especially for things that they buy all the time, like groceries, pet supplies, those kinds of things.
00:08:14.399 --> 00:08:19.680
And so they're hesitant to pass the tariffs along if they thought, well, maybe they won't stick.
00:08:19.680 --> 00:08:29.759
And then we saw that Supreme Court decision come out and say that the EPA tariffs, you know, were not held up, but the administration came out and said, okay, well, you know what?
00:08:29.759 --> 00:08:49.759
We found this other sort of rule that we can put tariffs on for five months, aka 150 days, while we do a study, a different kinds of studies, and then we'll have tariffs that are based on what are called section 232 and 301, which essentially means tariffs related to national security and unfair trade practices.
00:08:49.759 --> 00:08:52.799
And those have generally stood up over time.
00:08:52.799 --> 00:08:56.399
And so tariffs are here to stay, they're not going anywhere.
00:08:56.399 --> 00:09:01.120
And so that's in part why I think that, you know, we're still in the thick of it.
00:09:01.120 --> 00:09:06.399
We're still sort of at the at the at the peak of that one-time quote unquote hit.
00:09:07.120 --> 00:09:08.159
Very interesting.
00:09:08.159 --> 00:09:09.600
What about services?
00:09:09.600 --> 00:09:15.279
So, cost of goods obviously is impacted by tariffs and obviously other things.
00:09:15.279 --> 00:09:20.000
But when it comes to services, what are those things that consumers in the US complained about?
00:09:20.399 --> 00:09:30.799
Well, it's interesting because even, you know, 10 years ago or before, services didn't make up such a big part of our economic activity.
00:09:30.799 --> 00:09:35.840
And then, of course, we had COVID, where folks couldn't spend on services the way they did before.
00:09:35.840 --> 00:09:43.200
They were spending on goods, and that created a demand shock, and it created goods being a lot more expensive.
00:09:43.200 --> 00:09:47.440
Um, but folks really love to spend on services that are experiential.
00:09:47.440 --> 00:09:49.919
And I'm sure that you've studied that as well.
00:09:49.919 --> 00:10:04.480
So that's where travel, eating out, um, perhaps getting food delivered, um, and things that basically, and then sort of services related to health and beauty and wellness.
00:10:04.480 --> 00:10:08.559
And so we see consumers still really prioritizing that.
00:10:08.559 --> 00:10:27.200
In fact, eating out, getting food delivered, not necessarily cooking food at home, but doing that is still the number one service category that we see consumers saying that they plan to spend money on, which I think is really interesting because that's an easy way to cut back during hard financial times.
00:10:27.200 --> 00:10:27.679
Right.
00:10:27.679 --> 00:10:30.639
And I don't think the consumer's ready to cut back there yet.
00:10:30.639 --> 00:10:33.919
They like, they like to go to restaurants and they like their food delivery.
00:10:34.399 --> 00:10:39.679
Ease of convenience is very important, and comfort actually is something very important.
00:10:39.679 --> 00:10:46.799
As a mom, I can tell you that yes, getting my food delivered is definitely one of the higher priorities.
00:10:46.799 --> 00:10:48.559
I'm wondering what does that mean?
00:10:48.559 --> 00:10:50.799
What does it tell you from an economic perspective?
00:10:50.799 --> 00:11:02.559
So I keep on hearing my co-host Peter Tuchman, the Einstein on Wall Street, always talks about the economy, the market, how it's performing, and how it's affecting the broader economy in the US.
00:11:02.559 --> 00:11:10.879
When you look at the report, the consumer report, uh what does it really tell you in terms of where's the economy headed?
00:11:10.879 --> 00:11:16.879
Do you feel like outside of tariffs and obviously the consumer being more pressured in Q1 of 2026?
00:11:16.879 --> 00:11:26.480
Um, do you see like some kind of silver lining in all of it for consumers and the consumers actually spending more and helping the economy?
00:11:26.480 --> 00:11:27.679
Or where do you see that?
00:11:28.000 --> 00:11:39.679
Well, I think what's really interesting is that even if consumers feel a little negative, like your data shows, like our survey shows, they will continue to spend.
00:11:39.679 --> 00:11:55.759
But when they feel that the job market is really weakening, or they feel that they will lose a job, or they're sensing that people in their industry or their families, their friends are losing jobs, then they tighten up.
00:11:55.759 --> 00:11:59.519
So you can have negative feelings but still be spending.
00:11:59.519 --> 00:12:06.559
But when you think that your income, you know, is going to go away, that changes folks' perspective.
00:12:06.559 --> 00:12:19.440
And what we've seen is that even though the labor market is weakening over the last um few months and really a few quarters, we haven't seen the unemployment rate go up.
00:12:19.440 --> 00:12:22.480
So the unemployment rate is still at about 4.4%.
00:12:22.480 --> 00:12:42.080
And, you know, we have some demographic challenges because we have a very large population retiring with the baby boomer population, and we have policies that are, you know, really reducing or really almost eliminating immigration in our foreign-born workforce is getting smaller.
00:12:42.080 --> 00:12:50.480
And so even though there may be a mismatch between available jobs and available talent, we're still seeing a very stable labor market.
00:12:50.480 --> 00:13:00.159
But it's what econom economists call low hire, low fire, meaning it's stable, but we're not really adding a lot of jobs.
00:13:00.159 --> 00:13:05.360
And so that is making a lot of sort of Wall Street and other people a little bit nervous.
00:13:05.360 --> 00:13:20.639
Because if we're not adding jobs and we go through a weakening of the economy in consumer spending, which is 70% of our economy, starts to go away and companies start laying people off, that's when we may be in trouble.
00:13:20.639 --> 00:13:35.200
And so that's sort of a big part of what we look at, even though it's sort of in the background, that labor market component to the consumer confidence index and really to what's happening in the macroeconomy is a big part of that.
00:13:35.519 --> 00:13:42.480
And does the consumer confidence index uh report study sentiment, consumer sentiment, and and how that shifts?
00:13:42.480 --> 00:13:43.759
Do you guys also look at that?
00:13:44.080 --> 00:13:54.879
We do, and we ask uh the survey participants about their impressions of the labor market and of business conditions to see how that moves.
00:13:54.879 --> 00:14:03.200
And it's been fairly steady, but fairly negative, unfortunately, even though the spending is still pretty pretty strong.
00:14:03.519 --> 00:14:06.080
And what what has been that negative sentiment driver?
00:14:06.080 --> 00:14:08.639
What have you seen anything specific that comes out?
00:14:08.639 --> 00:14:11.679
It really is about public policy.
00:14:11.840 --> 00:14:23.759
You know, we're at a time where tariffs, geopolitics, going to war, Washington is driving the economic conversation.
00:14:23.759 --> 00:14:29.759
And Washington, in part, may drive, you know, how consumers spend.
00:14:29.759 --> 00:14:43.519
Now, one thing that I think will be interesting to see in the next um couple months is oftentimes around this time of year, we see a little bit of the consumer perking up because they get tax refund checks.
00:14:43.519 --> 00:14:47.039
And so, you know, and there's different statistics around that.
00:14:47.039 --> 00:14:49.360
So I'll be curious to see.
00:14:49.360 --> 00:15:03.519
You know, we do have some pressure on gasoline prices and some other um products, but it will be interesting to see if we see any sort of perkiness happen over the next couple months because people are getting getting some tax refunds.
00:15:03.519 --> 00:15:04.080
Right.
00:15:04.320 --> 00:15:07.120
Next month, I'm sure, will be uh maybe a different story.
00:15:07.120 --> 00:15:07.919
Maybe.
00:15:07.919 --> 00:15:22.720
When uh you mentioned the job market as something that the consumer confidence index also measures, and it's interesting to me for me to hear that there isn't so much worry around that based on the consumer findings, at least from this month.
00:15:22.720 --> 00:15:31.440
So, one of the things that I've seen on social media uh when I've analyzed consumer general consumer sentiment around employment has been AI.
00:15:31.440 --> 00:15:37.840
Oh, yes, that has been coming up over and over again, pretty much in every single analysis that I've done.
00:15:37.840 --> 00:15:48.480
And there's this big consumer fear that we see on social media among the US consumer that AI is here to stay and it's here to take our jobs away.
00:15:48.480 --> 00:15:55.840
What what do you say to the consumer uh you know, who is listening right now?
00:15:55.840 --> 00:16:00.000
Like, how should they think about you know the jobs and AI?
00:16:00.320 --> 00:16:03.519
I mean, it is really a big unknown for all of us, right?
00:16:03.519 --> 00:16:22.159
When you think about um will AI be a tool, you know, that sort of improves all of our lives potentially, makes us more productive, makes us more efficient, or is AI going to become an economist and write my reports?
00:16:22.159 --> 00:16:35.600
I mean, I don't know that an AI person can go on a podcast or an AI bot couldn't go on a podcast, but when each one of us probably thinks about our jobs and thinks about AI, there's part of our jobs, you know, that AI could do.
00:16:35.600 --> 00:16:42.399
Um, and so I think that there is probably reasonable concern all over the board, you know.
00:16:42.399 --> 00:16:52.720
I mean, AI is not going to deliver an Amazon package to your front door, but it could probably improve the process of getting an Amazon package to your front door.
00:16:52.720 --> 00:16:59.759
So, you know, I think we're in the early stages of really understanding what is going to happen.
00:16:59.759 --> 00:17:08.960
And we see that even, you know, with regards to data centers and infrastructure around AI and around sort of big technology.
00:17:08.960 --> 00:17:11.039
So I think we're in the early stages.
00:17:11.039 --> 00:17:19.119
I can definitely understand why folks um online and would have concerns because it's it is a great unknown.
00:17:19.119 --> 00:17:21.680
It's the next industrial revolution in many ways.
00:17:22.000 --> 00:17:23.680
And I'm sure we'll follow to see.
00:17:23.680 --> 00:17:23.920
Yeah.
00:17:23.920 --> 00:17:30.240
So besides good and services, what else does the consumer um confidence index measure?
00:17:30.720 --> 00:17:41.680
Um, well, we do also measure things somewhat related to age, which I'm curious to know, you know, what your data that you're measuring from social media also shows.
00:17:41.680 --> 00:17:53.599
So recently, in our most recent consumer confidence index, uh older folks, you know, um felt more negativity compared to younger folks.
00:17:53.599 --> 00:17:59.519
And it's sometimes it changes a little bit, you know, and it's not a dramatic uh difference.
00:17:59.519 --> 00:18:25.519
But I was wondering in looking at that, if older folks were perhaps responding to the hit to the stock market in the last month or so, because we really do see, in many ways, the economy showing up differently for wealthier who are often older consumers versus younger consumers who are still getting their footing.
00:18:25.519 --> 00:18:36.799
You know, one sort of good example of how this is showing up in the economy is, you know, I also focus, as I was saying, on uh infrastructure, the built environment, commercial real estate, and housing.
00:18:36.799 --> 00:18:41.759
And our age of a first-time home buyer is now 40.
00:18:41.759 --> 00:18:44.960
And in 2019, it was 33.
00:18:44.960 --> 00:18:46.559
Wow, what a difference.
00:18:46.559 --> 00:18:48.319
It's a huge difference.
00:18:48.319 --> 00:18:59.440
And a lot of that is because, well, we have a lack of supply of housing in the US, but we also have uh housing that is a lot more expensive.
00:18:59.440 --> 00:19:03.759
In some markets, housing prices have doubled since 2019.
00:19:03.759 --> 00:19:11.839
So, and we had low, low interest rates, and now we have higher interest rates, which are probably closer to normal and what they will be.
00:19:11.839 --> 00:19:19.119
And so that's really interesting because a lot of life, I jokingly always say, a lot of life is lived in your 30s, right?
00:19:19.119 --> 00:19:26.400
And the difference between 33 and 40, if you're getting married, having children, adding to your family is big.
00:19:26.400 --> 00:19:34.480
But it's also, and we know this from talking to our members, purchasing a house also drives a lot of consumer activity.
00:19:34.480 --> 00:19:42.559
Because often when folks purchase a house, they purchase furniture, they purchase appliances, they might purchase a second car.
00:19:42.559 --> 00:19:48.240
And we even learn from some of our corporate members, they also get pets.
00:19:48.240 --> 00:19:54.319
And they may have because they have a bigger house, they might be able to add to their furry family.
00:19:54.319 --> 00:20:01.680
And so owning a house or the process of buying a house or buying a new house also drives a lot of consumer activity.
00:20:01.680 --> 00:20:17.599
So having sort of this quiet housing market that's not sort of churning over like it used to, and that we're not adding residential has really meant that that's also probably dampening a little bit of consumer activity that we would have seen before.
00:20:17.920 --> 00:20:32.000
Well, that may be the fact now, but when we look at the audience of Gen Z and the demographics of Gen Z, while they are not preoccupied with buying a home, because obviously they're too young yet, they love going to shopping malls.
00:20:32.000 --> 00:20:40.000
So real estate for shopping malls, surprisingly, has actually changed dramatically over the last couple of years.
00:20:40.000 --> 00:20:45.039
I'd love to hear more of you had shared with me a very interesting statistics about that.
00:20:45.039 --> 00:20:47.519
I'd love for you to share with our audience as well.
00:20:47.759 --> 00:20:49.519
I think one of the things that's really interesting.
00:20:49.519 --> 00:20:51.039
Now I'm a little bit older.
00:20:51.039 --> 00:20:59.680
So I was a teenager in the 1990s, and that's what we went to the mall, because that's how you would see your friends, right?
00:20:59.680 --> 00:21:07.279
I mean, you see them in school or maybe activities, but we didn't interact on social media because social media didn't exist.
00:21:07.279 --> 00:21:19.359
So if you wanted to see your friends, you'd go to the food court, you'd go see a movie, you'd walk around the mall, or you know, especially because a lot of towns don't have quote unquote downtowns, you know, like they used to.
00:21:19.359 --> 00:21:25.920
Um, so I was really fascinated and, you know, following commercial real estate, we've had sort of the decline of the U.S.
00:21:25.920 --> 00:21:29.279
mall now for really 10 or 15 years.
00:21:29.279 --> 00:21:35.119
And that's largely due to online shopping replacing a lot of that purchasing activity.
00:21:35.119 --> 00:21:41.359
So I thought it was amazing to see that young, that young folks are like, let's get to the mall.
00:21:41.359 --> 00:21:51.039
But not only that, they're going to the mall and they're taking pictures and like putting them on TikTok or Instagram or what have you to show that they were at the mall.
00:21:51.039 --> 00:21:59.759
And, you know, it's really interesting in the sort of economic world or in the commercial real estate world, the discussion is not just like, okay, malls are back.
00:21:59.759 --> 00:22:06.400
But it's like what is going to make a mall attractive, right?
00:22:06.400 --> 00:22:16.319
So malls have sort of some of the malls that have saved themselves in the last few years have done it by attracting luxury consumers, right?
00:22:16.319 --> 00:22:24.000
Like back in the day, a mall, you could anchor it, you know, with a Macy's or a Bloomingdale's and get a lot of folks to the mall.
00:22:24.000 --> 00:22:27.359
But nowadays, sort of a lot of people shop at different stores.
00:22:27.359 --> 00:22:30.880
They're not necessarily interested in those big anchor stores in the same way.
00:22:30.880 --> 00:22:37.039
And so some malls have survived by sort of catering to that top quartile of shopper.
00:22:37.039 --> 00:22:40.319
But the conversation is really interesting.
00:22:40.319 --> 00:22:50.160
And I'm curious to hear what you're hearing from social media in the last, you know, six or 12 months about how young people, you know, feel they've rediscovered the mall.
00:22:50.160 --> 00:22:54.640
And so that's that's not your top quartile of shoppers next necessarily.
00:22:54.640 --> 00:23:05.759
So, you know, developers were thinking, okay, do I need to put up backgrounds and interesting things for or public art for like Instagram photo type opportunities?
00:23:05.759 --> 00:23:06.160
Right.
00:23:06.160 --> 00:23:14.960
Do I need to have like food or other sort of experiential things that speak to younger folks or social media presence?
00:23:15.119 --> 00:23:20.960
So and those are the future consumers giving us the survey uh responses.
00:23:20.960 --> 00:23:30.799
So the top three things that I've seen among Gen Z consumers in the US and why they go to the mall, because we analyzed that data, was to buy beauty products.
00:23:30.799 --> 00:23:39.519
That was the top category, actually, with some of the big large retailers like Sephora among those mentioned, um, Blue Mercury and a few of the others.
00:23:39.519 --> 00:23:44.480
The secondary one was actually apparel, which makes sense.
00:23:44.480 --> 00:23:45.119
Yes.
00:23:45.119 --> 00:23:50.640
And then the tertiary or the third one was entertainment, so movie goers.
00:23:50.640 --> 00:24:00.160
So there does seem to be a lot of that resurgence among the Gen Z consumers who are fueling our economy and making it stronger.
00:24:00.160 --> 00:24:00.720
Yeah.
00:24:00.720 --> 00:24:04.960
That they are very interested in going back to the mall to shop.
00:24:04.960 --> 00:24:05.440
Right.
00:24:05.440 --> 00:24:11.440
When we think of I love going back to the point of the economy and like again, where is the economy headed?
00:24:11.440 --> 00:24:13.599
Like, what are those things that impact us?
00:24:13.599 --> 00:24:22.160
From like the one, two, threes of whoa, this is scary coming up, to you know, maybe this is just normal at this point.
00:24:22.160 --> 00:24:27.039
What are those like things that you think are really impacting the economy right now?
00:24:27.039 --> 00:24:28.400
We talked about tariffs.
00:24:28.400 --> 00:24:28.880
Yes.
00:24:28.880 --> 00:24:34.319
We talked about the global trade war, which is comes with tariffs and the tariffs territory.
00:24:34.319 --> 00:24:36.640
We are talking wars.
00:24:36.640 --> 00:24:38.799
There's multiple wars going on right now.
00:24:38.799 --> 00:24:42.000
Are those really the key drivers of the economy?
00:24:42.000 --> 00:24:48.559
Or if what else is out there that could impact where the next 12 months will head into?
00:24:48.880 --> 00:24:49.839
That's a great question.
00:24:49.839 --> 00:24:54.480
So we forecast, we we do a forecast and we try to look ahead.
00:24:54.480 --> 00:25:03.680
Really, we try to look ahead five years, but it's very hard to look that far ahead, but we definitely are looking ahead, you know, at least one year.
00:25:03.680 --> 00:25:08.640
We measure economic activity, of course, through GDP and forecasting GDP.
00:25:08.640 --> 00:25:18.559
We do think that we will have a slower economy this year than we did last year and certainly the year before.
00:25:18.559 --> 00:25:35.359
Um, we do not think that we're going to enter into a recession, although the longer something like the Iran war happens and the higher we see gas line prices go, the greater likelihood that we would enter a recession.
00:25:35.359 --> 00:25:37.680
But a lot of that is about duration.
00:25:37.680 --> 00:25:45.039
And um, no one really has a strong sense of what the duration of this geopolitical conflict will be.
00:25:45.039 --> 00:25:50.079
But if it doesn't last super long, then it probably will not cause a recession.
00:25:50.079 --> 00:26:05.920
And tech there's no real technical definition of a recession, but most people accept um to geek out the NBER's definition, which is two quarters of negative growth that are really not just about one shock.
00:26:05.920 --> 00:26:11.359
So most likely we're not going to enter a recession, but we are going to have a slower economy.
00:26:11.359 --> 00:26:27.119
And I think a lot of that is does come down to just general uncertainty, you know, just hitting back on the topics that we've already even discussed: tariffs, geopolitical uncertainty, uncertainty around AI.
00:26:27.119 --> 00:26:40.319
So all of that uncertainty will just sort of could potentially contribute to, you know, a malaise for US consumers who decide, oh, I'm gonna rein in my spending a little bit.
00:26:40.319 --> 00:26:43.839
But again, that's a slowdown, not necessarily a recession.
00:26:44.240 --> 00:26:50.799
In terms of consumers who actually follow some of the consumer reports, there are several reports, obviously.
00:26:50.799 --> 00:26:52.960
Consumer confidence index is one.
00:26:52.960 --> 00:26:57.839
We have the CPI report, there's like different versions of the consumer report.
00:26:57.839 --> 00:26:58.319
Yes.
00:26:58.319 --> 00:27:04.480
What what uh what would you say basically when you collect these consumers for the survey?
00:27:04.480 --> 00:27:12.240
Like what's the one thing that you look for in the consumers who actually answer and respond for the consumer confidence index specifically?
00:27:13.279 --> 00:27:17.359
For the consumer confidence index specifically, we look at changes.
00:27:17.359 --> 00:27:22.240
So, which is kind of I think probably pretty typical of a survey.
00:27:22.240 --> 00:27:31.599
So we're really looking at how the change in the answer, you know, on a month over-month basis, year over year.
00:27:31.599 --> 00:27:37.440
And that's why, you know, we produce lots of charts and data and graphs, you know, that show.
00:27:37.440 --> 00:27:52.880
And it's really up oftentimes to, you know, leaders of corporation, those in the business community to probably decide some strategy based on consumers, you know.
00:27:52.880 --> 00:28:01.759
I think that one of the trends that we were talking about earlier that we've seen is sort of the divergence of what we call a K-shaped economy.
00:28:01.759 --> 00:28:10.000
So where we've had a lot of folks who are probably in the top, you know, quartile or top 10% of earners.
00:28:10.000 --> 00:28:19.200
Um, and they have they feel good, you know, their feelings about the economy are good because their stocks have gone up in the last few years.
00:28:19.200 --> 00:28:24.000
As we were saying, you know, the the price of housing and their equity in their houses have gone up.
00:28:24.000 --> 00:28:32.240
And so they have a wealth effect, you know, where they feel they feel wealthier and so they feel more confident spending.
00:28:32.240 --> 00:28:42.559
And the bottom third of sort of earners, folks, sort of in the economic spectrum might feel things tighter.
00:28:42.559 --> 00:28:57.920
And so that's another thing to sort of keep an eye on, and I think for a lot of decision makers, both you know, policymakers and corporate leaders, to keep an eye on, because some folks have said that a lot of our growth in our economy is really just coming from the top 10%.
00:28:57.920 --> 00:29:10.799
And that can be kind of tough because that's a small audience that does not necessarily show like a broad and strong economy if you're really only catering to the top 10%.
00:29:10.799 --> 00:29:29.039
So as we see some of these shocks, like the shock in gasoline prices or any other shocks like we could see with health insurance prices, that shock will affect folks at the bottom of earning and economic spending more than at the top.
00:29:29.039 --> 00:29:35.359
And so if they have to change their spending habits, you know, that's where we'll see things sort of show up.
00:29:35.359 --> 00:29:45.440
You know, one uh statistic that I saw was that the dollar store said that nowadays the majority of their customers make six figures or more a year.
00:29:45.440 --> 00:29:46.079
Oh, wow.
00:29:46.079 --> 00:30:03.920
Which isn't necessarily what people thought before, and that even Walmart and some stores that, you know, a lot of folks think cater to lower income or middle income folks are seeing a lot of higher income folks come in and purchase things because they want the value.
00:30:03.920 --> 00:30:06.160
They want bang for their buck.
00:30:06.160 --> 00:30:14.880
And so being able to sort of target certain demographics and understand their um their feelings about the economy are important.
00:30:14.880 --> 00:30:15.920
Very important.
00:30:16.079 --> 00:30:24.960
One of the statistics brings brings back some uh data statistics that I've analyzed was actually that uh the consumer is very value-driven.
00:30:24.960 --> 00:30:26.400
We've seen it over and over again.
00:30:26.400 --> 00:30:35.200
Anytime I've analyzed retail conversations, I consistently have seen in those last 12 months that consumers are value-driven.
00:30:35.200 --> 00:30:43.839
They're moving and shifting away from luxury retailers to the everyday retailers such as Walmart, such as Target, TJ Maxx.
00:30:43.839 --> 00:30:52.160
Obviously, we've seen it also in the print on Wall Street with some of the very successful earnings for companies like Walmart.
00:30:52.160 --> 00:30:56.880
Um, and it's interesting that you also mentioned healthcare.
00:30:56.880 --> 00:31:22.319
So, another topic I've also seen is that healthcare premiums and insurance conversations have spiked ever since the tariff announcement happened, because consumers have come with uh come out with a lot of concern regarding medical cost, regarding medication cost, right, and also regarding anything that has steel in it.
00:31:22.319 --> 00:31:23.759
So the steel and aluminum.
00:31:23.759 --> 00:31:26.559
Steel and aluminum, which goes into a lot of the medical.
00:31:26.559 --> 00:31:28.160
A lot of packaging, too.
00:31:28.160 --> 00:31:30.720
Right, medical devices that are made out of it.
00:31:30.720 --> 00:31:36.559
So it's interesting that you mentioned because again, the US consumer is pressured from every single angle.
00:31:36.559 --> 00:31:41.119
Now, another thing that you also mentioned is that the baby boomers are retired.
00:31:41.119 --> 00:31:41.519
Yes.
00:31:41.519 --> 00:31:44.000
Boy, that should I be concerned about that?
00:31:44.000 --> 00:31:45.599
What happens when they retire?
00:31:45.599 --> 00:31:48.079
I mean, aren't there like our worker force at the moment?
00:31:48.079 --> 00:31:49.039
I'm kidding.
00:31:49.519 --> 00:31:54.079
Well, it is interesting because we do see that change in the labor market.
00:31:54.079 --> 00:31:54.480
Right.
00:31:54.480 --> 00:32:00.640
So um I believe the youngest baby boomers maybe are in their 60s now.
00:32:00.640 --> 00:32:03.200
And so most of them will be retired.
00:32:03.200 --> 00:32:10.000
And then the generation after, my generation, generation X, is much smaller than the generations afterwards.
00:32:10.000 --> 00:32:21.200
So, you know, folks in retirement, as long as the stock market, you know, is still fairly strong, fairly resilient, they're still gonna spend money, probably.
00:32:21.200 --> 00:32:23.119
They'll spend it differently.
00:32:23.119 --> 00:32:37.440
Um, but definitely healthcare spending takes up more and more, you know, of folks' budgets, you know, and we see that in pharmaceuticals, as you were saying.
00:32:37.440 --> 00:32:39.920
And we also see that just in care.
00:32:39.920 --> 00:32:49.680
And so one thing that I think is really interesting to look at is not just health insurance, but also property insurance has really gone up in the last few years.
00:32:49.680 --> 00:32:51.920
And so these are must-haves.
00:32:51.920 --> 00:32:54.880
You know, you have to have generally health insurance.
00:32:54.880 --> 00:33:00.799
If you have a mortgage on your house, you have to have property insurance, you have to have automobile insurance.
00:33:00.799 --> 00:33:15.039
And so as these sort of required costs go up, we see that consumers might have to rein in some of their, you know, more fun optional spending, or like you were saying, look for value.
00:33:15.039 --> 00:33:19.119
Maybe instead of going to a more expensive supermarket, they go to Walmart.
00:33:19.119 --> 00:33:27.200
And I believe Walmart, besides being, you know, um non-perishable goods, I think is the country's largest grocery store as well.
00:33:27.200 --> 00:33:34.960
So I think that's where we see, I don't even want to call it trading down, but sort of more value purchases happening.
00:33:34.960 --> 00:33:36.000
Absolutely.
00:33:36.000 --> 00:33:39.119
Erin, thank you so much for the fascinating conversation.
00:33:39.440 --> 00:33:40.319
Thanks for having me.
00:33:40.319 --> 00:33:41.920
This has been really interesting.
00:33:41.920 --> 00:33:47.680
I appreciate all the knowledge that you shared and the consumer confidence index.
00:33:47.680 --> 00:33:53.920
I feel more educated and I'm excited to see what the next couple of months look for the U.S.
00:33:53.920 --> 00:33:54.319
consumer.
00:33:54.319 --> 00:33:56.400
It's not going to be boring, I don't think.
00:33:56.400 --> 00:33:58.000
I don't think so either.
00:33:58.000 --> 00:33:59.440
We appreciate your time.
00:33:59.440 --> 00:34:00.079
Thank you.
00:34:00.079 --> 00:34:07.119
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00:34:07.119 --> 00:34:10.800
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00:34:10.800 --> 00:34:14.800
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