WEBVTT - 2% Inflation and Small Business Outlook 0:00:01.280 --> 0:00:05.119 You're listening to the Bloomberg Opinion podcast. Catch us Saturdays 0:00:05.120 --> 0:00:08.280 at one in seven pm Eastern on Bloomberg dot com, 0:00:08.320 --> 0:00:11.479 the iHeartRadio app and the Bloomberg Business App, or listen 0:00:11.520 --> 0:00:13.760 on demand wherever you get your podcasts. 0:00:15.760 --> 0:00:19.880 Welcome to Bloomberg Opinion I Amy Morris. This week we 0:00:19.920 --> 0:00:24.119 focus on your wallet. Members of Generation Z and some 0:00:24.239 --> 0:00:29.240 millennials are feeling some intense economic anxiety. How is that 0:00:29.360 --> 0:00:33.559 different than any other generation that came before. Also, holiday 0:00:33.680 --> 0:00:36.600 shopping is upon us, and you might not be happy 0:00:36.640 --> 0:00:40.480 about the rising prices, but you're spending like you don't care. 0:00:41.159 --> 0:00:43.959 And you might have also noticed how the dining industry 0:00:44.040 --> 0:00:47.600 is going through a sweeping overhaul. But we begin with 0:00:47.680 --> 0:00:51.560 a look at small businesses and how America's smallest companies 0:00:51.600 --> 0:00:53.680 can tell us a lot about the health of the 0:00:53.760 --> 0:00:57.800 US economy and where the vulnerabilities are. Earlier this year, 0:00:57.880 --> 0:01:01.920 President Biden rebranded his economic policy with a plan that 0:01:01.960 --> 0:01:05.000 includes an investment in small business. 0:01:04.400 --> 0:01:10.120 First, making smart investments in America, Second, educated and empowering 0:01:10.200 --> 0:01:14.119 American workers to grow the middle class, and third promoting 0:01:14.160 --> 0:01:17.920 competition to lower cost to help small businesses. 0:01:17.560 --> 0:01:21.000 Let's bring in Bloomberg opinion columnists Jonathan Levin, who covers 0:01:21.200 --> 0:01:24.720 US markets and economics, and Jonathan, what are you seeing 0:01:25.200 --> 0:01:28.800 in America's small businesses that's giving you a read on 0:01:28.920 --> 0:01:31.600 the economy and where there might be weaknesses. 0:01:31.480 --> 0:01:34.440 So basically cautious optimism. I always think it is important 0:01:34.480 --> 0:01:37.039 to look at the small business space because they can 0:01:37.120 --> 0:01:39.360 be sort of a Canara in the coal mine, especially 0:01:39.520 --> 0:01:43.520 in an environment like this of contracting credit and higher 0:01:43.560 --> 0:01:48.080 interest rates. Of course, you know, small businesses are more 0:01:48.120 --> 0:01:51.840 sensitive to something like this because they have fewer financing 0:01:51.880 --> 0:01:54.960 options to start with. Right, They're basically dependent on what 0:01:55.040 --> 0:01:56.760 their bank will give them. They can't go out to 0:01:56.840 --> 0:02:01.720 the bond market, for instance, and they are extremely extremely 0:02:01.760 --> 0:02:06.120 exposed to those floating or variable rate loans. 0:02:06.280 --> 0:02:06.440 Right. 0:02:06.520 --> 0:02:10.360 So you like, when we think about housing markets, like, 0:02:10.680 --> 0:02:13.480 you know, why is the United States housing market feeling 0:02:13.600 --> 0:02:17.679 so much more resilient than say, say Canada. It's it's 0:02:17.800 --> 0:02:21.040 that variable rate effect, right, Like you know, when you 0:02:21.120 --> 0:02:24.160 have a variable rate, as soon as the Fed goes 0:02:24.160 --> 0:02:26.840 out and tightens, everybody feels it. It's not just the 0:02:26.840 --> 0:02:30.400 people going out and getting getting new loans. So I 0:02:30.440 --> 0:02:33.119 did think it was very important to look at small businesses, 0:02:33.160 --> 0:02:37.520 but the big picture is a picture of resiliency, and 0:02:38.200 --> 0:02:40.680 to sort of give everybody the tld R at the 0:02:41.040 --> 0:02:43.560 at the top, I don't want to say that they 0:02:43.600 --> 0:02:47.200 can hang in there forever. I don't think that small 0:02:47.200 --> 0:02:50.200 businesses are going to be able to hold up if 0:02:50.440 --> 0:02:54.600 the FED stays this tight for the foreseeable future. But 0:02:55.000 --> 0:02:59.480 at the moment, there's no reason to think that the 0:02:59.560 --> 0:03:02.399 small business sector is at imminent risk of some sort 0:03:02.440 --> 0:03:03.040 of collapse. 0:03:03.480 --> 0:03:04.080 Far from it. 0:03:04.120 --> 0:03:06.760 Actually, you actually made a really good point in your 0:03:06.760 --> 0:03:09.760 column on the Bloomberg terminal about how federal support during 0:03:09.760 --> 0:03:12.720 the pandemic may have impacted. This may have sort of 0:03:12.800 --> 0:03:17.960 skewed the numbers a little bit artificially supporting these businesses, 0:03:18.720 --> 0:03:21.360 so that you know, even had they not had that 0:03:21.360 --> 0:03:23.360 federal support, they might not have been here anyway. 0:03:23.800 --> 0:03:25.560 So you know, one of the reasons I like to 0:03:25.600 --> 0:03:28.799 dip into the bankruptcy space from time to time is 0:03:28.880 --> 0:03:31.720 to do a little bit of myth busting, right, and 0:03:31.800 --> 0:03:36.280 so tourists in the bankruptcy space well, from time to 0:03:36.320 --> 0:03:39.080 time on Twitter things like that or act I should say, 0:03:39.440 --> 0:03:42.880 they will pull up the chart of the trend in 0:03:42.960 --> 0:03:45.680 bankruptcy is. You know, maybe you'll take like a one 0:03:45.760 --> 0:03:48.880 year rolling average and you'll say, oh, my goodness, bankruptcies 0:03:48.920 --> 0:03:52.120 are trending up. And that is indeed true of small 0:03:52.160 --> 0:03:56.520 businesses as as well. But it's important to think about 0:03:56.640 --> 0:04:00.360 level as well as trend and buy in law. Large 0:04:00.400 --> 0:04:04.760 bankruptcies are still pretty low in the United States of 0:04:04.800 --> 0:04:08.920 America relative to what they average, say from like twenty 0:04:09.000 --> 0:04:11.960 fifteen to twenty nineteen, to give you a like a 0:04:12.000 --> 0:04:16.160 pre pandemic snapshot. And the reason for that is because 0:04:16.640 --> 0:04:20.040 you know, the federal government came out with these extraordinary 0:04:20.120 --> 0:04:25.159 relief programs during the pandemic that kept some firms afloat 0:04:25.200 --> 0:04:30.200 that might have organically gone under in the absence of 0:04:30.520 --> 0:04:35.039 the pandemic and that extraordinary support. Right, So there's a 0:04:35.080 --> 0:04:38.520 sense that we're really just sort of playing some catch 0:04:38.600 --> 0:04:42.360 up here, or in the jargon, doing a bit of normalizing, 0:04:43.200 --> 0:04:47.720 and that until we really you see the bankruptcy trends 0:04:47.760 --> 0:04:51.680 break out ahead of something that we would consider normal, 0:04:52.160 --> 0:04:56.160 it does feel early to be worrying about what's going 0:04:56.200 --> 0:04:56.640 on here. 0:04:57.000 --> 0:04:59.640 So with these smaller firms, they are hiring and they 0:04:59.640 --> 0:05:03.880 are spending money. It's just slowed but it is stable. 0:05:04.000 --> 0:05:06.679 To your point, it's the stabilization you need to watch, 0:05:06.800 --> 0:05:10.359 not so much the trend toward fast hiring or a 0:05:10.360 --> 0:05:12.120 lot of money versus the slowdown. 0:05:12.560 --> 0:05:17.760 So, like I said, nobody's pretending that they aren't facing headwinds. 0:05:17.880 --> 0:05:21.360 This has got to be a difficult environment for them. 0:05:21.400 --> 0:05:26.760 When when an extremely interest rate sensitive group of businesses 0:05:28.880 --> 0:05:32.760 is suddenly is suddenly faced with the velocity and the 0:05:32.839 --> 0:05:35.560 levels of interest rates that we're facing across the country. 0:05:35.600 --> 0:05:40.520 Nobody's saying that that isn't heart But the empirical evidence suggests, 0:05:40.600 --> 0:05:44.480 as you point it to, that they are still spending money, right, 0:05:44.520 --> 0:05:49.680 So Bank of America uses their own internal data to 0:05:49.839 --> 0:05:54.600 track spending from small businesses. The headline on the NFIB 0:05:54.960 --> 0:05:58.640 is that small business optimism looks to be very weak. 0:05:59.000 --> 0:06:03.320 But my interpret rotation of that is, okay, is that 0:06:05.080 --> 0:06:09.320 literally telling us something about the economy or is it 0:06:09.360 --> 0:06:13.039 telling us more about the partisan nature of the world 0:06:13.080 --> 0:06:16.760 we live in today. I think there's some of the former, 0:06:16.880 --> 0:06:19.560 but there's also a good chunk of the latter. So 0:06:19.680 --> 0:06:23.000 we have to take this weak small business confidence with 0:06:23.040 --> 0:06:25.760 sort of a grain of salt. Having said all of that, 0:06:26.400 --> 0:06:29.080 you know, to your point, I do think that there's 0:06:29.080 --> 0:06:34.680 a self fulfilling aspect to all confidence, So it doesn't 0:06:34.720 --> 0:06:37.359 really matter at the end of the day why people 0:06:37.400 --> 0:06:42.880 feel bad. They might feel bad because their candidate, you know, 0:06:43.000 --> 0:06:46.279 isn't doing well in the polls, or they're chosen president 0:06:46.360 --> 0:06:48.800 isn't in the White House. If they feel bad, they 0:06:48.839 --> 0:06:55.120 feel bad, and eventually that can actually be reflected in 0:06:55.160 --> 0:06:58.520 the amount of investing that they do, the number of 0:06:58.560 --> 0:07:00.599 people that they hire, and so on and so forth. 0:07:00.720 --> 0:07:06.599 So I say, take the NFIB small business sentiment survey 0:07:06.839 --> 0:07:09.720 with a grain of salt. But if it stays a 0:07:09.800 --> 0:07:14.800 negative territory for the foreseeable future, could it start to matter? Yeah, 0:07:14.840 --> 0:07:15.240 for sure. 0:07:15.480 --> 0:07:17.560 Well let's get into that a little bit. You had 0:07:17.600 --> 0:07:20.960 referred to small businesses as acting as something of a 0:07:20.960 --> 0:07:23.120 canary in the coal mine when it comes to the 0:07:23.960 --> 0:07:27.160 health of the US economy. So over the next quarter, 0:07:27.280 --> 0:07:29.120 let's say, what are you going to be looking for? 0:07:29.200 --> 0:07:32.320 What should we all be watching for when that canary 0:07:32.360 --> 0:07:33.560 goes down into the coal mine. 0:07:35.080 --> 0:07:41.320 So I would, in terms of watching the bankruptcy data itself, 0:07:41.360 --> 0:07:44.640 this stuff could get really noisy, So I would not 0:07:45.240 --> 0:07:49.200 get excited about small business bankruptcies unless you saw a 0:07:49.400 --> 0:07:55.880 really meaningful breakout sort of to the upside. And the 0:07:55.960 --> 0:08:01.080 reason for that is it's sort of multi foil. As 0:08:01.080 --> 0:08:06.080 I said, we're still at really modest levels of bankruptcy, 0:08:06.240 --> 0:08:10.080 so like you would sort of want to wait for 0:08:10.400 --> 0:08:13.520 the normalization to take place and see if the trend 0:08:13.600 --> 0:08:18.920 keeps going A and number two there is there's something 0:08:18.960 --> 0:08:22.760 else going on in the bankruptcy code at the same time, 0:08:23.400 --> 0:08:27.239 and it's hard to disaggregate that from the macroeconomic trends. 0:08:27.320 --> 0:08:27.440 Right. 0:08:27.960 --> 0:08:32.600 So basically we often forget this. But in twenty nineteen, 0:08:32.640 --> 0:08:36.600 an Act of Congress created this thing called sub Chapter 0:08:36.679 --> 0:08:40.760 five in the Chapter eleven code, and it gave a 0:08:40.760 --> 0:08:46.120 lot of small businesses access to sort of a form 0:08:46.120 --> 0:08:48.920 of reorganization that they probably wouldn't have been able to 0:08:48.960 --> 0:08:52.000 access in the past, both because of the complexity of 0:08:52.080 --> 0:08:55.440 the code and the inherent costs and all of that. 0:08:55.800 --> 0:08:58.960 And so this for the first time, starting when this 0:08:59.040 --> 0:09:02.000 became effective in twenty twenty, brought a lot of small 0:09:02.040 --> 0:09:07.480 businesses into the bankruptcy data for the first time. And 0:09:07.720 --> 0:09:10.320 a lot of proponents of this change would say, this 0:09:10.440 --> 0:09:14.160 is actually a good thing, right. This means that more 0:09:14.240 --> 0:09:20.360 small businesses are availing themselves of this new structure to 0:09:20.440 --> 0:09:25.960 try and survive. Not it's not a bad thing at all, 0:09:26.280 --> 0:09:31.560 potentially right, So as sub Chapter five becomes more popular, 0:09:31.640 --> 0:09:35.120 we need to be aware of the fact that the 0:09:35.200 --> 0:09:40.640 numbers of small business bankruptcies maybe going up, and it 0:09:40.679 --> 0:09:44.960 may not necessarily be telling us anything about macroeconomic cycles. 0:09:45.240 --> 0:09:48.120 So my point on the bankruptcy's data is I would 0:09:48.120 --> 0:09:52.840 be very cautious with getting carried away about small ticks 0:09:52.920 --> 0:09:57.319 up or small ticks in the other direction. I would 0:09:57.320 --> 0:10:01.920 tend to watch other indicators more clo including what's going 0:10:01.960 --> 0:10:06.720 on with the payments data. Bank of America is a 0:10:06.720 --> 0:10:10.080 great resource fairly real time, and of course I would 0:10:10.120 --> 0:10:14.480 be watching what's going on with jobs. I think, you know, 0:10:14.559 --> 0:10:17.520 people often tell you that the labor market is a 0:10:17.600 --> 0:10:21.280 lagging indicator. I think it's more complicated than that. I 0:10:21.320 --> 0:10:25.960 think hiring is a great way to express your relative 0:10:26.000 --> 0:10:29.720 confidence in the economy. It is sort of a medium 0:10:29.800 --> 0:10:32.920 term commitment that you, as business owner make with a 0:10:32.920 --> 0:10:37.080 potential employee, and it tells us a great deal about 0:10:37.240 --> 0:10:41.640 where the proprietor of that business sees the economy and 0:10:41.800 --> 0:10:44.839 their business prospects. In three months or six months or 0:10:44.840 --> 0:10:48.120 twelve months down the line, and so far it looks like, 0:10:48.400 --> 0:10:50.840 you know, they think things are going to be okay 0:10:51.040 --> 0:10:51.880 in that horizon. 0:10:52.080 --> 0:10:55.319 Jonathan Levin is a Bloomberg Opinion columnist who covers US 0:10:55.360 --> 0:10:58.920 markets and economics. Bloomberg Opinion continues with a look at 0:10:58.960 --> 0:11:02.199 holiday shopping and even with the higher prices, that's not 0:11:02.240 --> 0:11:04.679 slowing you down. This is Bloomberg. 0:11:13.080 --> 0:11:16.920 You're listening to the Bloomberg Opinion podcast count US Saturdays 0:11:16.920 --> 0:11:20.080 at one and seven pm Eastern on Bloomberg dot com, 0:11:20.120 --> 0:11:23.280 the iHeartRadio app, and the Bloomberg Business App, or listen 0:11:23.320 --> 0:11:25.560 on demand wherever you get your podcasts. 0:11:27.520 --> 0:11:31.120 This is Bloomberg Opinion. I'm Amy Morris. We are well 0:11:31.160 --> 0:11:34.880 into the annual ritual of shopping, baking and planning for 0:11:34.960 --> 0:11:38.640 the holiday season, the food and the gifts and the travel. 0:11:38.880 --> 0:11:41.120 And in fact, this holiday season is bound to be 0:11:41.160 --> 0:11:45.040 a blockbuster. The National Retail Federation expects shopping to hit 0:11:45.120 --> 0:11:49.079 record levels this month and in December. Kristin McGrath is 0:11:49.120 --> 0:11:52.000 an editor with Retail Me Not, which finds consumers are 0:11:52.040 --> 0:11:54.360 spending twenty nine percent more than last year. 0:11:54.559 --> 0:11:57.640 Retailers are starving extra early because they want shoppers to 0:11:57.720 --> 0:11:59.720 do multiple rounds of shopping. 0:12:00.320 --> 0:12:03.800 And even though consumers are not happy with these higher prices, 0:12:04.200 --> 0:12:06.480 that's not slowing them down. Let's talk about this with 0:12:06.520 --> 0:12:10.520 Bloomberg Opinion columnist and author of the Bloomberg Opinion Today newsletter, 0:12:10.880 --> 0:12:14.360 Jessica Carl And Jessica, how are things different from last year? 0:12:14.800 --> 0:12:17.559 Economists had predicted that the US was going to enter 0:12:17.600 --> 0:12:18.240 a recession. 0:12:18.679 --> 0:12:21.880 Yeah, so last year's predictions did not work out this year, 0:12:22.679 --> 0:12:25.560 hopefully we won't enter a recession, but people still have 0:12:25.640 --> 0:12:27.920 mixed feelings about whether that will happen. But really, what 0:12:28.040 --> 0:12:32.079 happened this year was the disconnect between the consumer and 0:12:32.080 --> 0:12:36.200 what economists saw. So consumers weren't happy about the economy 0:12:36.200 --> 0:12:39.719 all year long, and that was the big economic story. 0:12:39.480 --> 0:12:42.880 Of last year, right right, the big disconnect between consumer 0:12:43.000 --> 0:12:47.280 sentiment and consumer behavior. What's causing that disconnect. 0:12:47.760 --> 0:12:49.760 It has to do with the thing called money illusion. 0:12:50.000 --> 0:12:53.000 So people love to hate on the economy and they'll say, oh, 0:12:53.080 --> 0:12:55.560 everything was cheaper years and years ago, but they don't 0:12:55.600 --> 0:12:58.120 recognize that their wages have gone up and things have 0:12:58.240 --> 0:13:01.000 just gotten more expensive across the board. But they wouldn't 0:13:01.040 --> 0:13:03.560 be like happy about. You know, they're not talking about 0:13:03.559 --> 0:13:06.080 their wages. They're talking about this price sticker on the 0:13:06.440 --> 0:13:09.360 bag of oreos that they're buying at the store, which, 0:13:09.400 --> 0:13:12.880 by the way, it's interesting there's this big theory about 0:13:12.880 --> 0:13:16.720 how oreos are also a stagflationary trend, where like the 0:13:16.840 --> 0:13:19.840 cream inside of them, the ratio that to the cookie 0:13:19.960 --> 0:13:23.199 is going down. So there's these visible, tangible signs that 0:13:23.240 --> 0:13:25.960 people start to worry about the economy, and that's like 0:13:26.000 --> 0:13:30.000 an interesting thing, and it's totally It says a lot 0:13:30.400 --> 0:13:32.600 that they're saying a lot of different things versus what 0:13:32.640 --> 0:13:34.640 they're actually spending their money on. So people are still 0:13:34.679 --> 0:13:37.520 spending and spending and spending. So economists are very confused 0:13:37.559 --> 0:13:41.199 by the sentiment being very negative, but yet they're spending 0:13:41.240 --> 0:13:43.160 and the credit card debt's going up and stuff like that. 0:13:43.200 --> 0:13:45.360 So it's just interesting. 0:13:45.440 --> 0:13:48.400 When you talk about like shrink flation, like the example 0:13:48.400 --> 0:13:51.720 that you just gave with the oreos, many people do 0:13:51.960 --> 0:13:55.000 tend to see the economy through the lens of their purchases, 0:13:55.080 --> 0:13:57.040 how much they're paying for items and the impact of 0:13:57.760 --> 0:13:59.960 I guess shrink flation for lack of a better word, 0:14:00.480 --> 0:14:04.720 what are you seeing among consumers is that the going 0:14:04.760 --> 0:14:05.559 trend at this point. 0:14:06.240 --> 0:14:10.439 I think they're definitely more observant of when the quality 0:14:10.480 --> 0:14:13.720 of their products goes down. There's also you know, and 0:14:13.760 --> 0:14:16.880 they're usually lower ticket items. They're you know, bag of chips, 0:14:17.400 --> 0:14:21.480 cake mix, which is interesting. People observe that Betty Crocker's 0:14:21.480 --> 0:14:24.960 cake mix, the weight of the dry ingredients went down, 0:14:25.120 --> 0:14:28.000 so they actually just are putting less cake mix in 0:14:28.000 --> 0:14:29.600 the box and telling you to use the same amount 0:14:29.600 --> 0:14:31.640 of wet ingredients. So people are picking up on these 0:14:31.840 --> 0:14:35.280 little things that are happening in their day to day lives, 0:14:35.280 --> 0:14:37.800 and that's causing them to believe that the economy is 0:14:37.840 --> 0:14:40.360 really bad. And there's probably a lag right if we're 0:14:40.360 --> 0:14:43.640 seeing really great disinflationary data right now, that will take 0:14:43.680 --> 0:14:46.200 time for consumers to kind of realize that, oh, things 0:14:46.200 --> 0:14:48.680 aren't getting more expensive. But the reality is that those 0:14:49.080 --> 0:14:52.040 prices that went up in our inflationary times are going 0:14:52.080 --> 0:14:53.960 to kind of stay at that level. So that's not 0:14:54.040 --> 0:14:55.200 making people happy. 0:14:56.040 --> 0:15:00.560 I understand the anger or the discontent with the inflation 0:15:00.640 --> 0:15:04.920 and with the prices. However, could that disconnect between the 0:15:04.920 --> 0:15:10.160 consumer spending and the consumer sentiment be politically motivated? 0:15:10.800 --> 0:15:13.320 It can certainly be politically motivated. I think if you 0:15:13.440 --> 0:15:17.480 look at who's president during the different times, everyone blames 0:15:17.520 --> 0:15:20.680 the bad economy on that current president if they don't 0:15:20.720 --> 0:15:24.480 agree with their political belief Sure. So yeah, I mean 0:15:24.560 --> 0:15:27.520 during Trump, Democrats said the economy is awful, and during Biden, 0:15:27.600 --> 0:15:30.120 Republicans will say the economy is awful. And the reality 0:15:30.160 --> 0:15:32.120 is that Biden's economy is actually really good. He just 0:15:32.200 --> 0:15:35.480 has like a messaging problem and he needs to kind 0:15:35.480 --> 0:15:38.240 of appeal to more moderate voters in that respect, which 0:15:38.320 --> 0:15:40.880 we've also written about. But it's a challenge definitely from 0:15:40.880 --> 0:15:44.280 a messaging standpoint, especially when you're seeing little scigns that 0:15:44.320 --> 0:15:46.760 make you believe that the economy is bad. And we 0:15:46.800 --> 0:15:48.880 also talked about this in terms of the vibe session 0:15:49.320 --> 0:15:53.240 all throughout last year, which basically just says people are 0:15:53.240 --> 0:15:54.920 saying the vibes are off, the vibes are off, but 0:15:54.920 --> 0:15:57.760 what does that really mean. They're still spending, They're still 0:15:57.800 --> 0:16:00.880 propping up the economy, and that's hopeful we'll stay true 0:16:00.880 --> 0:16:01.800 next year as well. 0:16:02.120 --> 0:16:04.640 And were you You mentioned a few baking items as 0:16:04.640 --> 0:16:07.120 far as shrinkflation is concerned. But let's get into it 0:16:07.160 --> 0:16:09.560 a little bit because we are entering the holiday season. 0:16:09.600 --> 0:16:13.120 This is when we travel, we shop, we give gifts, 0:16:13.200 --> 0:16:17.120 we bake. What are we anticipating then, if the consumer 0:16:17.160 --> 0:16:21.720 sentiment is down, but the consumer spending of late has 0:16:21.760 --> 0:16:25.200 been higher, could this be a big boom for the 0:16:25.200 --> 0:16:26.360 holidays shopping season. 0:16:26.840 --> 0:16:29.800 The holiday shopping season has definitely been pushed forward, and 0:16:29.840 --> 0:16:31.640 you can already see this week if you go into 0:16:31.640 --> 0:16:34.160 your browser, this is the week. You know, we're talking 0:16:34.280 --> 0:16:36.800 leading up to Thanksgiving, but we're not Black Friday yet. 0:16:37.800 --> 0:16:40.040 You can see that people are already putting things on sales. 0:16:40.080 --> 0:16:43.200 Sites are having these big sales even before Black Friday. 0:16:43.720 --> 0:16:45.720 I think part of that is because the retailers are 0:16:45.800 --> 0:16:49.440 kind are confused about what consumers are willing to spend. 0:16:49.520 --> 0:16:51.400 They you know, people say they're on a budget, blah 0:16:51.440 --> 0:16:54.120 blah blah, but like all signs point to them spending 0:16:54.520 --> 0:16:56.760 a crazy amount of money. There's there's I think that 0:16:56.840 --> 0:16:59.440 TSA said they're expected to be a record travel season. 0:16:59.440 --> 0:17:02.200 They always say that, but it should be a record 0:17:02.280 --> 0:17:04.320 travel season this year. So people are spending on flights, 0:17:04.359 --> 0:17:08.040 they're spending on gifts, they're spending on food. So I mean, 0:17:08.040 --> 0:17:10.359 I think it could be a blockbuster but nobody really 0:17:10.359 --> 0:17:11.760 knows yet, obviously. 0:17:11.720 --> 0:17:14.760 And we are talking with Bloomberg opinion columnist Jessica Carl 0:17:15.000 --> 0:17:19.639 about consumer sentiment during the holiday season. Also, Jessica, another 0:17:20.119 --> 0:17:24.000 indicator are people saving? Could this spending all of our 0:17:24.000 --> 0:17:25.479 money come back to haunt us? 0:17:26.400 --> 0:17:28.720 Yes, I don't know if people are saving as much 0:17:28.760 --> 0:17:32.119 as we would hope. During COVID we did have this big, 0:17:32.240 --> 0:17:36.280 big build up of consumer saving. So that is good 0:17:36.320 --> 0:17:39.520 in respects In that way, our coffers are still pretty strong. 0:17:39.600 --> 0:17:42.840 But people are spending money on entertainment. There's just spending 0:17:42.880 --> 0:17:45.960 and spending and spending. Bloomberg actually ran a big graphics 0:17:45.960 --> 0:17:50.200 piece yesterday about auto loans and how those our auto 0:17:50.240 --> 0:17:52.800 loan delinquencies are up. A lot of people take out 0:17:52.800 --> 0:17:54.520 these auto loans and they have no ability to pay 0:17:54.560 --> 0:17:58.600 them back and credit card that is also, you know, troubling. 0:17:58.640 --> 0:18:00.399 So I think there are these signs that going to 0:18:00.720 --> 0:18:04.240 the American consumer be weakening a bit, but also the 0:18:04.320 --> 0:18:08.119 job market hopefully will stay strong and will continue to 0:18:08.160 --> 0:18:10.760 see people spend. But if there are signs that cause 0:18:10.800 --> 0:18:14.440 people to pull back, that would not be a good thing. 0:18:14.800 --> 0:18:17.480 What is then the conventional wisdom for twenty twenty four. 0:18:17.520 --> 0:18:19.480 We all seem to get twenty twenty three a little 0:18:19.480 --> 0:18:22.080 bit wrong, a little off. What about twenty twenty four? 0:18:22.400 --> 0:18:25.640 I think the recession stories hopefully behind us. If those 0:18:25.680 --> 0:18:29.960 disinflationary trends continue, that will be probably the big story, 0:18:30.040 --> 0:18:32.880 and hopefully the economy will improve and strengthen. I think 0:18:32.880 --> 0:18:35.679 the job market is also something to keep an eye on. 0:18:36.280 --> 0:18:38.119 If people start to feel as though they're stuck in 0:18:38.160 --> 0:18:42.480 their jobs whereas though they can't get hired elsewhere, that's 0:18:42.720 --> 0:18:45.120 definitely going to cause the economy to weaken. So there's 0:18:45.160 --> 0:18:47.520 just some certain things to keep an eye on, like boys. 0:18:47.560 --> 0:18:50.119 But the good news is that the CPI numbers are 0:18:50.480 --> 0:18:53.440 very positive and hopefully will continue to see those come 0:18:53.480 --> 0:18:55.159 down in the future. 0:18:55.320 --> 0:18:58.159 And what are you watching for over the next few months. 0:18:58.200 --> 0:19:00.600 We only have a few more weeks before the end 0:19:00.640 --> 0:19:01.480 of twenty twenty three. 0:19:02.160 --> 0:19:05.359 I always love to see the holiday shopping trends. I 0:19:05.600 --> 0:19:08.480 After Christmas, it's always interesting to look at the returns 0:19:08.640 --> 0:19:11.879 and see how many people are returning things and stuff 0:19:11.920 --> 0:19:15.440 like that. But yeah, I think hopefully we will see 0:19:15.440 --> 0:19:20.280 the consumer sentiment index improve, like ideally that would they 0:19:20.520 --> 0:19:23.359 follow the inflation data that we're seeing now. But like 0:19:23.400 --> 0:19:25.680 I said, there could be a lag, and I mean 0:19:25.840 --> 0:19:30.280 that whole money illusion could continue, but in an ideal 0:19:30.320 --> 0:19:31.399 world that would stop. 0:19:31.680 --> 0:19:35.240 Does that create problems for anything more than our ability 0:19:35.280 --> 0:19:38.800 to predict what consumers are going to be doing when 0:19:38.880 --> 0:19:43.120 there's that disconnect between the sentiment and the actual action. 0:19:43.720 --> 0:19:46.920 And sometimes people talk about it being a self fulfilling prophecy, 0:19:47.040 --> 0:19:49.760 which we did hear a lot about last year. If 0:19:49.800 --> 0:19:52.000 you say the economy is bad, bad, bad, but it's 0:19:52.040 --> 0:19:54.800 actually okay, then you'll start to believe it at some 0:19:54.880 --> 0:19:57.200 point and you just will rein back your own spending. 0:19:57.320 --> 0:19:59.600 And if everybody's doing that, then that will cause the 0:19:59.640 --> 0:20:03.200 econ to enter some type of recession, which is not good. 0:20:04.400 --> 0:20:07.800 But if people continue to spend, then that illusion is 0:20:08.280 --> 0:20:11.840 kind of a nine. It doesn't really impact as much. 0:20:11.920 --> 0:20:14.440 But if people really start to pull back, then that's 0:20:14.440 --> 0:20:15.639 where you'll see a problem. 0:20:15.800 --> 0:20:19.080 Jessica Carl is a Bloomberg Opinion columnist and author of 0:20:19.080 --> 0:20:22.360 the Bloomberg Opinion Today newsletter, and coming up, we'll look 0:20:22.400 --> 0:20:26.680 at generational financial anxiety and how it's impacting millennials in 0:20:26.760 --> 0:20:29.360 gen Z. You're listening to Bloomberg. 0:20:40.200 --> 0:20:44.000 You're listening to the Bloomberg Opinion podcast. Catch us Saturdays 0:20:44.040 --> 0:20:47.159 at one and seven pm Eastern on Bloomberg dot Com, 0:20:47.240 --> 0:20:50.359 the iHeartRadio app and the Bloomberg Business App, or listen 0:20:50.440 --> 0:20:52.680 on demand wherever you get your podcasts. 0:20:54.640 --> 0:20:57.880 You're listening to Bloomberg Opinion. I'm Amy Morris. Less than 0:20:57.920 --> 0:21:01.440 one third of Generation Z feels financially secure. In more 0:21:01.480 --> 0:21:04.880 than half say they're worried about not having enough money, 0:21:04.960 --> 0:21:07.439 and not just a little worried either. After years of 0:21:07.480 --> 0:21:10.640 being told that everything's going to be just fine, millennials 0:21:10.680 --> 0:21:14.720 are treading water. Seventy three percent living paycheck to paycheck. Okay, 0:21:14.800 --> 0:21:18.960 let's learn more about this generational financial anxiety with Bloomberg 0:21:19.000 --> 0:21:22.720 Opinion columnist Aaron Lowry, who covers personal finance Arin. Why 0:21:22.720 --> 0:21:26.119 can't we just tell millennials and Gen z ers simmer down, 0:21:26.720 --> 0:21:29.840 It'll be all right, take control of your financial financial 0:21:29.880 --> 0:21:31.359 lives like the rest of us had to do. 0:21:31.440 --> 0:21:35.199 This is different, It's never too because again, I just 0:21:35.240 --> 0:21:37.320 always feel the need to assert this up top with 0:21:37.400 --> 0:21:41.720 millennial conversations. Oldest millennials are forty two years old. We 0:21:41.800 --> 0:21:44.399 are no longer children, right, we are. 0:21:44.359 --> 0:21:45.760 No longer in our twenties. 0:21:45.880 --> 0:21:50.720 The very youngest of the millennial generation is very close 0:21:50.760 --> 0:21:54.600 to thirty. And I think that that contextually is so important, 0:21:54.680 --> 0:21:57.720 because you can't tell a forty two year old just wait, 0:21:57.880 --> 0:21:59.360 just wait your turn. 0:21:59.400 --> 0:22:02.800 It's gonna come. Everything's going to even out. We're starting 0:22:02.840 --> 0:22:03.440 to feel. 0:22:03.200 --> 0:22:05.960 A little panicked at this point, and I think a 0:22:05.960 --> 0:22:09.080 big part of that too is there have been so 0:22:09.320 --> 0:22:14.399 many quote unquote once in a lifetime experiences that it 0:22:14.440 --> 0:22:18.679 feels like happens every time millennials have almost gotten that 0:22:18.760 --> 0:22:22.080 financial foothold. You know, the Great Recession happened as the 0:22:22.080 --> 0:22:25.560 eldest of millennials are coming into the workforce. Don't worry, 0:22:25.640 --> 0:22:29.560 it's a recession. It'll pass, You'll be fine. Okay, Great, 0:22:29.560 --> 0:22:32.400 we started to get control, then the housing market goes 0:22:32.400 --> 0:22:34.919 crazy and it's so hard to buy a house, and 0:22:34.960 --> 0:22:36.879 then all of a sudden, a pandemic comes. And it 0:22:37.119 --> 0:22:40.000 just feels like any time we get the slightest bit 0:22:40.040 --> 0:22:42.320 of advancement, something comes to punch us in the mouth 0:22:42.359 --> 0:22:43.680 and it's so frustrating. 0:22:44.960 --> 0:22:48.080 Is that why the baseline of financial comfort is more 0:22:48.119 --> 0:22:51.200 elusive for this generation. It's just rotten timing. 0:22:52.680 --> 0:22:55.399