Where consumers are deciding to cut back

  • 3 weeks ago
Jeffrey Roach Chief Economist at LPL Financial, joins TheStreet to discuss what changes he’s seen in consumer spending habits.
Transcript
00:00So as an economist, as you look at the broad spectrum of spenders, with extra savings dwindling,
00:07especially as you said on the low income scale, do you see where consumers are starting to choose
00:16to cut back and tweak their spending? Well, we've seen a pullback in some of those big
00:22ticket items. So furniture, for example. So you also have cars. Now car sales have
00:32stayed pretty elevated, but we know from the amount of incentives that really dealers are
00:39starting to see a little more pressure on the consumer and really to entice them to come on
00:44the lot, they have to put a little more of those incentives. So the incentive as a percentage of
00:50average transaction price is increased a little bit. I think those are some of the leading
00:54indicators where you're starting to see the beginnings of a slowdown. Again, this is not a
00:59massive type of recessionary type slowdown, but a slowdown nonetheless. And do you see any areas,
01:07especially in terms of luxuries, where people, despite the falling savings rate,
01:11still want to spend their money on? Well, we still see some pretty strong demand for travel.
01:17You look at the throughput data that the TSA puts out, so you can track the number of folks
01:22that are going through securities stations throughout the country. And travel has certainly
01:28been very, very strong. We continue to break new and new records on the amount of travel.
01:36And so it seems as if that component is remaining pretty solid. And of course,
01:41we're at peak travel season right now, so it's important to compare apples to apples here. So
01:47you compare at this stage of the summertime relative to previous years. Demand for travel
01:53is still strong. That's certainly going to be good news for restaurants, for those in the
01:58accommodation sector, the hotels, et cetera.

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