Consumer confidence recently hit a 12-year low.
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00:00Consumer confidence falling to its lowest level in many years says a lot of things about how consumers are feeling right now.
00:08It doesn't always line up with how they're actually spending their money.
00:11But what we saw from the conference board's read on consumer confidence for current expectation was, you know, a fourth consecutive decline in that index.
00:19But what was even more troublesome was future expectations.
00:23That reading fell to its lowest level in 12 years.
00:26The index came in at about 65.2.
00:29The baseline for that reading is 80.
00:31So anything under 80 supposedly signals a recession coming.
00:35So it's the future expectations or what consumers are very concerned about.
00:40If you looked at why, it's everything from tariffs, which could possibly increase prices, and really the labor market.
00:46If you looked at expectations for what consumers are expecting for labor coming up in the next 12 months,
00:51that reading was lower as far as how many jobs do you think will be available?
00:56Or do you think there will be more jobs available in the future than there are now?
00:59And that reading decreased to about 16.5 percent.
01:02Last month it was 18.5 percent.
01:05So we're seeing consumers a little more worried about their jobs and not only keeping their jobs,
01:10but if they were to lose one, not so confident they could get another one very quickly.
01:15The consumer is still out there and spending for the most part, but we can see some uncertainty creeping in there.
01:21As we've seen prices tick up and increasingly stay very, inflation staying sticky,
01:26the U.S. consumer has continued to spend, and that's what we're known for, right?
01:30Like two-thirds of our GDP is consumer spending.
01:33Consumers are very good at spending, and that is part of what makes the U.S. economy very strong.
01:38But like I said, we are starting to see some cracks, not only in sentiment, but in credit card delinquencies.
01:44So I follow the New York Fed's quarterly report on household debt and credit, and we are starting to see debt creep up.
01:51It was up about 0.5 percent in the fourth quarter from the prior quarter in the prior year.
01:57And then if you look at some of the delinquency data, mainly credit cards and auto loans,
02:03we are seeing delinquency rates creep up over 30 days and even some in deep delinquency 90-plus days.
02:10So the consumer is feeling less certain.
02:12They are still out there buying to some degree, but they are racking up that credit card debt in the meantime.
02:17And so it will be really enlightening to see over the next earnings season what some of the big-box retail names are saying.
02:25One thing that was in the recent Dollar Tree report was that they are seeing more higher-income folks trading down,
02:32coming into Dollar Tree, and that they've seen this trend.
02:35There is a value-based consumer, a consumer that's out there looking for a bargain,
02:39and we've seen similar comments from Walmart as well.