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Speaker 1: This is the Bloomberg Surveillance Podcast.

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Speaker 2: I'm Lisa Abramoids along with Tom Keen and Jonathan Ferrow.

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Speaker 2: Join us each day for insight from the best in economics, geopolitics,

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Speaker 2: finance and investment.

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Speaker 1: Subscribe to Bloomberg Surveillance on demand.

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Speaker 2: On Apple, Spotify and anywhere you get your podcasts, and

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Speaker 2: always on Bloomberg dot Com, the Bloomberg Terminal, and the

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Speaker 2: Bloomberg Business App.

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Speaker 1: Let's get to it.

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Speaker 2: It is an important conversation on a day devoted to

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Speaker 2: celebrating retail sales. Let's head over to Macy's in New

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Speaker 2: York City's Herald Square, where bloombergs Caroline Hyde is joined

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Speaker 2: by the company's CEO, Jeff Gannett.

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Speaker 3: Caroline, Lisa, and Gina. Is a joy to be with

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Speaker 3: you with Jeff Gannett. Of course, on a day people

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Speaker 3: que they run in. The celebration is upon US Seal

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Speaker 3: Super Bowl. What are they buying today for Black Friday?

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Speaker 4: So they're buying everything on their gift list, and they're

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Speaker 4: buying that's really generally in luxury, so fine jewelry, they're

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Speaker 4: buying Kashmere, they're buying outwork for the entire family, Hostess

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Speaker 4: Gifts in our home store, but they're also home prep.

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Speaker 4: We've got great deals as we always do for Black Friday,

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Speaker 4: going all the way through the holiday season.

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Speaker 5: So we are ready.

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Speaker 4: We've got all of our key items, you know, loaded

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Speaker 4: to bear. Here we are in Harold's Square. It was

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Speaker 4: a good opening. We had a great day online yesterday

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Speaker 4: during Thanksgiving.

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Speaker 3: I mean you said that on your earnings, which what

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Speaker 3: what but a week ago? Yes, that this gets earlier

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Speaker 3: and earlier Black Friday. The competition. How important are the

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Speaker 3: next few days and the run up to the holidays.

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Speaker 5: Oh, it's still very important.

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Speaker 4: So you know, when you think about kind of Black

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Speaker 4: Friday deals really started it right after Halloween is when

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Speaker 4: they started. But this is still a pilgrimage you've got

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Speaker 4: you know, America is traveling, and they are in homes,

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Speaker 4: and they're coming into stores just like this one today.

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Speaker 4: They're online. They've been online all the way through. So

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Speaker 4: it's very very important. So when we look at kind

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Speaker 4: of Black Friday through Cyber Week, then we go into

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Speaker 4: a lull. It's like ten days where people kind of reset,

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Speaker 4: and then those last ten days become increasingly important. So

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Speaker 4: it's one of the three stages right now that we

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Speaker 4: are at the kind of the Christmas shopping is when

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Speaker 4: we're in right now.

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Speaker 3: First, what, of course your earnings showed so clearly is

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Speaker 3: that it's about inventory management in many ways at the moment,

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Speaker 3: and you've been managed and to ace that, how are

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Speaker 3: you ensuring you've got the right thing in the right

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Speaker 3: time for a consumer that basically we're all trying to

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Speaker 3: understand right now.

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Speaker 4: So obviously the consumer's under pressure, but they still love gifts,

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Speaker 4: and so we want to make sure that we've got

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Speaker 4: all the right gifts and we've got all the right

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Speaker 4: stock content in them. So I just walked this entire

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Speaker 4: store to really understand where we are in all of

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Speaker 4: the content across all of our categories, and we're in

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Speaker 4: great shape. And that's really in tribute to the amount

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Speaker 4: of work we've been putting in an inventory control.

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Speaker 3: And when it comes to online versus in store. In retail,

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Speaker 3: this is how you've been shifting the company. In particular,

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Speaker 3: people aren't perhaps having the footfall in mals, they're coming

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Speaker 3: to one off stores, they're going to smaller stall experiences.

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Speaker 3: But e commerce has just been the focus. How are

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Speaker 3: you managing to be at the right time, in the

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Speaker 3: right place for an omni channel purchase.

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Speaker 4: So really there's the strength of Macy's and Bloomingdales and

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Speaker 4: bloom Mercuries that we're omni channel and we're omni category.

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Speaker 4: So what you have is you have customers that are

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Speaker 4: shopping online, they want to come into a store and

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Speaker 4: try it on and maybe are transacting on the couch

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Speaker 4: later that night. So the opportunity to make it as

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Speaker 4: convenient for the customer as possible, however and whenever they

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Speaker 4: want to shop. So that's our beauty and doing that

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Speaker 4: with a national footprint with a great website is what

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Speaker 4: we depend on.

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Speaker 3: And of course why you've got such a great birdside perspective,

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Speaker 3: because you do have Bloomingdale's for the higher and more

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Speaker 3: luxury purchaser and then more income breadth. When it comes

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Speaker 3: to Macy's, what are we seeing in terms of the consumer?

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Speaker 3: Are they going to be spending more? Are they going

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Speaker 3: to be putting back?

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Speaker 4: So you do have customers that are under pressure. And

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Speaker 4: so when you think about the inflation is still high.

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Speaker 4: It's abating from the change at the inflation rate from

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Speaker 4: last year, but it's still higher than it was last year,

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Speaker 4: and customers have got a limited budget, some of it

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Speaker 4: they're spending and inexperiences, and then in our discretionary categories,

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Speaker 4: so we want to make sure that we've got the

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Speaker 4: right price points across that entire spectrum. But you still

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Speaker 4: give gifts, and this is where Macy's and Bloomingdale's and

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Speaker 4: Bloomercrey shine. So when you have this gift somebody on

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Speaker 4: your gift list, we're going to have the right content

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Speaker 4: for you at the right price point. And we spend

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Speaker 4: from when Black Friday ends to where we are right now.

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Speaker 4: We've been spending the year getting ready for that, and

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Speaker 4: we do trial runs in Valentine's Day, Mother's Day, Father's

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Speaker 4: Day to make sure we've got.

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Speaker 5: The right gifts.

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Speaker 3: You're ready, You're ready. People are worried, Analysts might be

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Speaker 3: worried that you're kind of managing decline at the moment.

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Speaker 3: What would you say to a comment like that.

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Speaker 4: Look, I think that if we weren't an apartment store today,

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Speaker 4: we would invent one. So the idea about having multi

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Speaker 4: categories being able to do that in multi channels, we

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Speaker 4: now have been able to get new categories and as

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Speaker 4: a result of Marketplace, which is now online at both

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Speaker 4: Bloomingdales and in Macy's. So I bet on department stores

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Speaker 4: and obviously I made my career doing this and it

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Speaker 4: is a you know, it's still very very relevant. You know,

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Speaker 4: we're obviously looking at where traffic is moving from on

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Speaker 4: mall to off mall. We're obviously testing that in both

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Speaker 4: Bloomingdale's with the Bloomys format and with Macy's with Macy's

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Speaker 4: and so we're going to be ready for where the

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Speaker 4: customer is evolving, and we've got very strong assets to

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Speaker 4: be able to do that, both on mall and obviously.

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Speaker 3: Online evolving into a world where we're all using chatbots

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Speaker 3: and artificient intelligence at front and center, and these are

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Speaker 3: sort of areas of investment.

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Speaker 4: Yes, absolutely, because when you think about AI and machine learning,

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Speaker 4: think about when we have forty million customers at Macy's

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Speaker 4: four million of Bloomingdals.

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Speaker 5: We know them very well.

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Speaker 4: So to have all that data and be able to

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Speaker 4: start to personalize content and values for those customers is

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Speaker 4: where this is all going. How do you make your

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Speaker 4: brand more relevant? And that is at a customer level.

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Speaker 4: It's no longer broad based promotion. It's the opportunity to

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Speaker 4: be able to I know, Caroline, and based on what

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Speaker 4: you buy, what you might be interested in them and

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Speaker 4: to be able to serve that up in the way

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Speaker 4: you want it served up is really the secret of

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Speaker 4: success for an omni channel retailer going forward.

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Speaker 3: You, of course just mentioned throughout your career this is

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Speaker 3: what you've been doing. For those who don't realize, you've

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Speaker 3: worked at the Macy's Brown for more than forty years

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Speaker 3: and this is your last Black Friday, and of course

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Speaker 3: CEOs that's twenty seventeen. You have been thought of as

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Speaker 3: a turnaround focus, the polarist, the way in which you

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Speaker 3: have thought about personalization, e commas and whether to of

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Speaker 3: course the COVID in and of itself. Do you feel

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Speaker 3: that you've got the plate Macy's where you want it

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Speaker 3: to be as you look towards as being your last

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Speaker 3: Black Friday?

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Speaker 5: Yeah, Look, when I.

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Speaker 4: Reflect back on my career, and certainly in my time

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Speaker 4: in CEO, I didn' accomplish everything that was on my list.

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Speaker 4: But look, the focus on relevant content, on amazing values,

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Speaker 4: and on customer experience is clearly the path forward. And

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Speaker 4: I couldn't be more excited about my successor who was

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Speaker 4: more than ready to be able to do this. He

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Speaker 4: knocked the cover off the ball with respect to Bloomingdale's

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Speaker 4: and what he was able to do there. How he

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Speaker 4: was able to kind of help turn around the strategy

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Speaker 4: of Bloe Mercury. He's now going to do that for

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Speaker 4: Macy's Inc. So he's got a good game plan and

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Speaker 4: he's going to make it better.

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Speaker 3: Jeff Cannette, we thank you so much for spending time

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Speaker 3: with us on what is your last Black Friday, But

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Speaker 3: still got a few more days in there, and of

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Speaker 3: course the job. He's here until February as the CEO

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Speaker 3: and CEO elect Tony Spring. But with that we sent

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Speaker 3: him back to you in the studio.

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Speaker 1: Thank you so much.

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Speaker 2: Bloomberg's Caroline Hyde and macy CEO Jeff Gannett on his

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Speaker 2: last Black Friday on the floor talking about the importance

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Speaker 2: of gifts, joining us to give us his review of

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Speaker 2: the scene from White Plains. Joe Feldman, Senior Research Analyst

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Speaker 2: and Assistant director of Research at tells the advisory group,

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Speaker 2: this is sort of the tradition. You wake up early,

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Speaker 2: I assume, and you go out to see what's going

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Speaker 2: on in different stores. Can you just give us a

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Speaker 2: rundown of what your first take is this year.

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Speaker 6: Yeah, so I did get up early, as you said,

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Speaker 6: part of the tradition.

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Speaker 7: And it was very quiet out there. I was in

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Speaker 7: a best Buy and a Target.

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Speaker 6: So far, not too many stores are open yet, you know,

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Speaker 6: Best Buy, Target, Dick Sporting Goods were all open around

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Speaker 6: six am. And the traffic is like they're all ready

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Speaker 6: for the Black Friday day. You know, their well stocked.

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Speaker 6: The signage was great, a lot of employees in the store,

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Speaker 6: just not a lot of people yet. And I think

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Speaker 6: that's because you can get a lot of the goods

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Speaker 6: in those prices earlier. I mean, you could have gotten

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Speaker 6: yesterday online, you could have gone in the past week really,

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Speaker 6: and a lot of these stores they started their Black

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Speaker 6: Friday sales much earlier than we've seen in the past.

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Speaker 6: And I think that that's, you know, just elogating the

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Speaker 6: season and also less of a rush to get out

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Speaker 6: first thing in the morning for that doorbuster.

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Speaker 8: Joe, I want to really key in on this idea

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Speaker 8: that many of the retailers are not open yet, because

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Speaker 8: my recollection is over the last couple of years we

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Speaker 8: were extending the opening hours among retail We had a

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Speaker 8: lot of retailers even opening a few years ago on

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Speaker 8: Thanksgiving as opposed to waiting to open early on Black Friday.

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Speaker 8: What's the change here? Is it really just the overall

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Speaker 8: extension of the season and the advent of online retail

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Speaker 8: as a really critical component of our shopping strategy. Or

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Speaker 8: is there a labor component to this? Is there something

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Speaker 8: to do with lack of labor, lack of available labor

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Speaker 8: and also some pushback from labor as to what they're

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Speaker 8: willing to do.

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Speaker 6: You know, I think that's a great point, because I

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Speaker 6: do think that labor isn't component here where you know,

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Speaker 6: the retailers have decided that you know, look, given the

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Speaker 6: volumes that they've seen in the past couple of years,

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Speaker 6: and maybe it's better to treat their employees better and

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Speaker 6: you know, maybe not have everybody out at midnight on

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Speaker 6: Black Friday or even you know at the end of

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Speaker 6: you know, six at six pm on Thanksgiving like we

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Speaker 6: saw several years ago, you know, where the traffic end

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Speaker 6: of the store just wasn't enough to warrant a spending

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Speaker 6: on the labor and be you know, giving labor a

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Speaker 6: break and giving that the store employees a chance to

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Speaker 6: rest and enjoy the holiday with their families and then

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Speaker 6: come and refresh for the next day. I do think

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Speaker 6: that by elongating the season that helped alleviate some of

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Speaker 6: that stress and puts less emphasis on just this Black

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Speaker 6: Friday along. I do think we're going to see a

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Speaker 6: pretty decent day in the malls later and out in

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Speaker 6: the stores and for the whole weekend. But again, you know,

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Speaker 6: it's just a longer period that we're seeing.

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Speaker 8: Okay, so a decent day that today, a decent weekend potentially,

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Speaker 8: what does that mean for that longer period? What are

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Speaker 8: you expecting for holiday sales. We had a pretty good

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Speaker 8: conversation with Wells Fargo earlier this morning. They're looking at

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Speaker 8: five percent retail sales growth, which frankly doesn't sound too

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Speaker 8: bad given long term average pace of sales growth this

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Speaker 8: time of year is about four. That sounds pretty decent,

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Speaker 8: pretty optimistic. What are you a TELS group thinking, Yeah, the.

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Speaker 6: Five percent is a little bit optimistic, but we've seen

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Speaker 6: quite a few people with you know, estamate somewhere in

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Speaker 6: that three to five percent area. At Tells the Advisor,

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Speaker 6: our formal estimate is three and a half to four percent.

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Speaker 6: We did it two ways. We looked at it bottom up,

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Speaker 6: just like looking at all the forecasts for the companies.

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Speaker 6: We also looked down at top down, just looking at

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Speaker 6: the macro data of all the US government retail sales three.

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Speaker 7: And a half four percent.

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Speaker 6: We felt like, as you said, that four percent or

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Speaker 6: so is kind of the long term average.

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Speaker 7: And it feels like this is going to be a

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Speaker 7: bit more of a normal year like that.

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Speaker 1: So, Joe, I got to be honest.

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Speaker 2: The main topic of discussion at my household for Thanksgiving

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Speaker 2: was genitor of A and I and how it's going

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Speaker 2: to transform our world. I know it sounds like it's

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Speaker 2: scintillating a holiday discussion, but I'm curious from your vantage.

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Speaker 8: Polisa has a particularly nerdy house.

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Speaker 2: It's okay, I ambracive, but I'm curious. You know how

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Speaker 2: much that's changing the way people stop. I mean, given

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Speaker 2: the fact that a third of people responded to the

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Speaker 2: survey that I was reading are using some generative AI

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Speaker 2: to figure out how to shop. I mean, how is

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Speaker 2: this shifting the way that some of these companies really

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Speaker 2: try to cater to their customers.

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Speaker 6: So I think the retailers are starting to embrace it.

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Speaker 6: It still feels very early for it though, and the

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Speaker 6: quality of the generative AI the responses you get is

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Speaker 6: somewhat mixed. But the retailers are working aggressively to try

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Speaker 6: to help you do things more efficiently for their own

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Speaker 6: organizations and also serve the customer better. You know, if

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Speaker 6: you think about the chatbots that you get when you

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Speaker 6: go online, or you know, maybe if the large language

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Speaker 6: model generative AI have more natural responses and better quality responses.

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Speaker 7: I think that's coming.

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Speaker 6: It's not quite here yet, but people are embracing it,

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Speaker 6: and I think that the retailers are all trying to

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Speaker 6: get there, but it's really I think a couple of years.

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Speaker 7: Away before we're going to see a major impact from it.

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Speaker 2: Although if you take a step further, Joe, there was

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Speaker 2: something else, you know, just sort of in the catastrophic

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Speaker 2: rate realm of time, which is also you know, it

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Speaker 2: makes dinners really exciting. I'm curious about, you know, what

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Speaker 2: this means for the employment picture. We're talking about labor,

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Speaker 2: and it's actually very much connected to what you were

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Speaker 2: just talking about with Gina. You know, you don't have

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Speaker 2: to pay a robot to work during the holidays. How

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Speaker 2: much is there this feeling of you know, cash registers

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Speaker 2: that are self checkout, different programs that can do personal

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Speaker 2: shopping for you. I mean, there's an evolution to this

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Speaker 2: that can really cut back some of the base costs

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Speaker 2: for these retailers. How much are we seeing that in

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Speaker 2: the stores at this point?

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Speaker 6: At this point, I think it's still relatively low because

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Speaker 6: of that particular technology generator d AI. But I do

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Speaker 6: think that we have seen technology reduced costs for retailers

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Speaker 6: to make them run more efficiently.

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Speaker 7: We've seen, as you mentioned, you.

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Speaker 6: Know, automated self checkout, your assisted self checkout. Now you

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Speaker 6: can have one person manning five or six registers at

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Speaker 6: the same time. You know, it's a lot more efficient,

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Speaker 6: and then you can get people onto the floor to

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Speaker 6: help the customers. You can stalk the aisles better, so

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Speaker 6: there's a lot that you could do. And then on

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Speaker 6: the back end and just on the supply chain side,

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Speaker 6: there's so much you can do now. Retailers have been

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Speaker 6: embracing AI and machine learning for years. The generative part

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Speaker 6: is where it's new, and that's still yet to come.

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Speaker 6: And you know, my understanding is a lot of the

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Speaker 6: retails are they're still staffing up you know, they still

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Speaker 6: need the people to even be able to harness it

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Speaker 6: and the data, you know, the software engineers to really

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Speaker 6: write the code and to really embrace it. And you know,

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Speaker 6: I do think there's an important element here where people

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Speaker 6: are so crucial to the system because it does create

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Speaker 6: those jobs for people, you know, maybe more skilled labor

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Speaker 6: on the software engineering side. Also within the store, you

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Speaker 6: still want customer facing people. You still want people to

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Speaker 6: help the customer, and so I think it just changes

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Speaker 6: the tasks for labor within the store rather than necessarily

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Speaker 6: cut labor tooth thin.

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Speaker 8: Joe, can we talk a little bit about the broader

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Speaker 8: competitive landscape for a retailer right now? Because I'm struck

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Speaker 8: by this idea that consumers are still very focused on experiences,

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Speaker 8: on spending on certain visus ongoing to restaurants. How are

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Speaker 8: retailers thinking about not just their competition with their fellow

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Speaker 8: retail but their general competition for consumer dollars in an

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Speaker 8: environment where consumers are clearly preferring to go and spend

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Speaker 8: on services relative to goods.

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Speaker 7: Yeah, you know, I think the retails are doing two things.

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Speaker 6: One is they're trying to create a more exciting environment

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Speaker 6: and more more of an experience itself within the store,

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Speaker 6: or if you're shopping online, have a more more efficient experience,

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Speaker 6: a better fun experience, want of discovery, treasure hunted to

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Speaker 6: some extent at some stores.

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Speaker 7: The other part is innovation.

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Speaker 6: Whenever we see innovation in product, whether it's you know, apparel,

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Speaker 6: you know, furnishings or electronics, the consumer tends to respond.

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Speaker 6: And so you know, when we have had that innovation,

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Speaker 6: you know, the consumer responds. We're trying to push innovation

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Speaker 6: a little bit more from the retail side, but I

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Speaker 6: do think the retailers have been very prudent in their outlook,

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Speaker 6: understanding that services spending is still you know, recovering actually

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Speaker 6: from where you know, to get back to even pre

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Speaker 6: pandemic levels. So we're not fully there yet. So I

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Speaker 6: think the assumption is that you will see continued spending

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Speaker 6: on services. The retailers are just trying to find a

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Speaker 6: way to create exciting merchandise to get people to buy

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Speaker 6: that at the same time. And that's also why I

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Speaker 6: think we're going to see a decent holiday season, because

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Speaker 6: the consumer has money, they're just spending in different pockets

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Speaker 6: right now. And I think that that selective or choiceful spending,

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Speaker 6: as someone said, you know, is really where you can

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Speaker 6: see that shift.

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Speaker 2: Now.

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Speaker 6: The time is, you know, the holiday season, gift giving.

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Speaker 6: I think that's where you're going to see that shift back.

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Speaker 6: You know, maybe come first quarter, you know winter, people

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Speaker 6: want to get away. Travel starts to happen again at

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Speaker 6: school breaks in the February March.

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Speaker 7: Time for period.

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Speaker 2: Joe Feldman, thank you so much for being with us.

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Speaker 2: A happy holidays, Joe Feldman of tells the advisory group, thank.

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Speaker 1: You for being with us.

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Speaker 2: Justin Wilfer's, professor of economics at the University of Michigan.

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Speaker 1: Taking a look at Thanksgiving.

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Speaker 2: Thanksgiving distantly saying, well, the cost of living is up,

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Speaker 2: and consumer perception is that everything is more expensive. The

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Speaker 2: price of your holiday dinner actually fell from a year ago.

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Speaker 2: The price of turkey down more than five percent, stuffing

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Speaker 2: down almost three percent, Cranberry's down eighteen percent. Pumpkin pie lovers, though,

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Speaker 2: that price up almost four percent. I did make a

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Speaker 2: pumpkin pie, and actually I did notice that justin joining

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Speaker 2: us now, Justin, it's interesting that.

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Speaker 1: You put this out.

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Speaker 2: It seems like, yes, it is interesting just on the

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Speaker 2: face level of Thanksgiving, but there's a deeper message here

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Speaker 2: about kind of where there is disinflation and how that

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Speaker 2: isn't necessarily showing up in consumer sentiment.

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Speaker 1: What's your take on.

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Speaker 9: That, Lisa, I'm glad you saw the deeper message. Look,

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Speaker 9: the deeper message was almost a form of performance on

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Speaker 9: I pretended to care about these individual prices. The reality is,

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Speaker 9: if you want to track the cost of living, what

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Speaker 9: you need to do is go and visit hundreds of

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Speaker 9: supermarkets from dozens of cities and sample thousands of goods

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Speaker 9: and have.

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Speaker 10: Very sophisticated comput to put it all together.

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Speaker 9: And thank goodness, we have someone who does that for us,

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Speaker 9: called the BLS. And instead, what we get every year

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Speaker 9: and basically every news cycle is some interest group or

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Speaker 9: one side of the political spectrum or another will pretend

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Speaker 9: to obsess and pretend to care about things like the

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Speaker 9: price of turkeys. And actually the graphic you to shout,

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Speaker 9: I think was a beautiful teaching point because it's always

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Speaker 9: the case that whether inflation's two percent or whether it's

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Speaker 9: four percent, that there's a bunch of stuff going up

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Speaker 9: a fair bit. And right there you've got like, ah,

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Speaker 9: that pumpkin pie mix, And I noticed bread rolls are

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Speaker 9: a little bit more expensive too, And you've got a

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Speaker 9: bunch of stuff.

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Speaker 10: Going down, like the price of fresh cranberries.

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Speaker 9: Turkey prices are plummeting because you know, the bird flow

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Speaker 9: is a bit behind us, and so trying to tell

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Speaker 9: the story of the whole economy through graphics like this,

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Speaker 9: and I'm not having to go at Bloomberg because you

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Speaker 9: were honest about it, Lisa, but often the major cable

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Speaker 9: networks or not is an absurd way of trying to

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Speaker 9: track the macro economy.

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Speaker 10: Let's focus on the data instead.

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Speaker 8: You correctly note that also airline costs are going down,

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Speaker 8: so the cost of services is intriguingly going down year

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Speaker 8: over year on top of the cost of goods going down.

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Speaker 8: In that kind of environment where we are seeing generally

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Speaker 8: prices at least rationalizing from sky high piece of inflation

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Speaker 8: over the last couple of years, why are consumers telling

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Speaker 8: us that they're expecting more inflation going forward.

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Speaker 9: Well, I think the simplest model of what's going through

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Speaker 9: consumer's mind is minds. They're not running sophisticated models of

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Speaker 9: the form that you are, or that your viewers might be.

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Speaker 9: They're going to the store and so generally one of

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Speaker 9: the best ways of predicting inflation is whatever's currently happening

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Speaker 9: is going to continue to happen, and all the rest

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Speaker 9: of the other stuff, what's going on with import prices

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Speaker 9: or oil prices or the output gap, is just a

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Speaker 9: slight modification of that.

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Speaker 10: And consumers, of course, also are incredibly.

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Speaker 9: Responsive to the most salient prices, the most salient prices

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Speaker 9: obviously being gasoline, I think beyond that food and so

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Speaker 9: consumer inflation expectations tend to track those things a little

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Speaker 9: bit too much. Now, the problem with this, of course

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Speaker 9: is what's not st land well, the cost of healthcare,

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Speaker 9: the cost of education. But these things are a huge

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Speaker 9: part of the consumer basket, the cost of housing as well,

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Speaker 9: and so inflation expectations often or perceptions, may not track

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Speaker 9: reality particularly well at important points because we're a little

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Speaker 9: bit too focused on what we see at the store

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Speaker 9: and not what really matters.

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Speaker 8: So what do you think policymakers are focutfull focus on

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Speaker 8: the perceptions are reality?

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Speaker 9: Well, every policy maker I talk to it gets told

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Speaker 9: they should look at the darn data. Now, if you're

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Speaker 9: talking about political policy makers, they've got two jobs. One

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Speaker 9: is to figure out what's going on, and the other

439
00:19:49,960 --> 00:19:53,040
Speaker 9: is to convince the electric to re elect them. Some

440
00:19:53,080 --> 00:19:56,480
Speaker 9: of the genuinely silliest commentary we get on the economy,

441
00:19:56,480 --> 00:20:01,040
Speaker 9: including and particularly on inflation, comes from congressional representative because

442
00:20:01,080 --> 00:20:04,680
Speaker 9: they're always looking for the juiciest, least representative SoundBite that

443
00:20:04,760 --> 00:20:07,919
Speaker 9: helps their side the most. I worry that if you

444
00:20:07,960 --> 00:20:12,760
Speaker 9: spend your whole time, all day every day saying, for instance, Biden,

445
00:20:12,800 --> 00:20:16,240
Speaker 9: inflation has caused the price of dinner rolls to skyrocket,

446
00:20:16,240 --> 00:20:19,639
Speaker 9: that you might eventually start to believe it. So I

447
00:20:19,680 --> 00:20:21,880
Speaker 9: think those folks, I really do worry about their view

448
00:20:21,920 --> 00:20:24,600
Speaker 9: on the economy. Now, I know Jay Powell and our

449
00:20:24,640 --> 00:20:27,880
Speaker 9: friends at the FED are a little more sophisticated. They're

450
00:20:27,920 --> 00:20:30,880
Speaker 9: focusing on the real data. They've got folks pouring over

451
00:20:30,920 --> 00:20:33,640
Speaker 9: every line of those of the CPI, of the PCE

452
00:20:34,000 --> 00:20:36,560
Speaker 9: and so on, and I think they're telling pretty much

453
00:20:36,560 --> 00:20:40,600
Speaker 9: the correct story, which is that inflation is moderating. There

454
00:20:40,640 --> 00:20:44,160
Speaker 9: are good reasons to be optimistic it may moderate. One

455
00:20:44,200 --> 00:20:47,000
Speaker 9: of the most notable things that has happened over the

456
00:20:47,040 --> 00:20:50,840
Speaker 9: past year really is that Jay Pallace started to talk

457
00:20:50,840 --> 00:20:53,960
Speaker 9: about inflation in terms of supply sharks, that's a real

458
00:20:53,960 --> 00:20:56,959
Speaker 9: optimism that the bad times were due to supply and

459
00:20:57,280 --> 00:20:59,600
Speaker 9: the supply shocks are behind us, which gives you a

460
00:20:59,600 --> 00:21:02,040
Speaker 9: whole lot a reason to feel optimistic that the better

461
00:21:02,080 --> 00:21:03,040
Speaker 9: times are ahead of us.

462
00:21:03,320 --> 00:21:05,760
Speaker 2: This sort of speaks to the whole immaculate disinflation idea

463
00:21:05,760 --> 00:21:08,120
Speaker 2: that it was just a supply shock right siding itself,

464
00:21:08,160 --> 00:21:10,280
Speaker 2: and that there was this transitory it's sort of back

465
00:21:10,320 --> 00:21:11,560
Speaker 2: to transitory without saying the.

466
00:21:11,520 --> 00:21:13,680
Speaker 1: T word, which they were pilloried for.

467
00:21:13,840 --> 00:21:16,280
Speaker 2: How much are we now starting to see demand side

468
00:21:16,400 --> 00:21:16,800
Speaker 2: pick up?

469
00:21:16,840 --> 00:21:19,480
Speaker 1: For that, especially with real wages actually.

470
00:21:19,119 --> 00:21:21,960
Speaker 2: Turning positive in a more material way, with how much

471
00:21:22,000 --> 00:21:23,200
Speaker 2: inflation is coming in.

472
00:21:24,280 --> 00:21:26,119
Speaker 9: Well, what really matters for inflation is what's going on

473
00:21:26,160 --> 00:21:29,640
Speaker 9: with nominal wages. What matters for your quality of life

474
00:21:29,680 --> 00:21:32,720
Speaker 9: is of course real wages, and nominal wage growth has

475
00:21:32,760 --> 00:21:35,880
Speaker 9: been you know, fairly moderate, not far off what would

476
00:21:35,880 --> 00:21:39,120
Speaker 9: normally be consistent with two percent inflation if you think about,

477
00:21:39,119 --> 00:21:41,760
Speaker 9: you know, inflation plus productivity, and I think, now you've

478
00:21:41,760 --> 00:21:44,239
Speaker 9: got to have inflation plus productivity plus a little bit

479
00:21:44,240 --> 00:21:47,320
Speaker 9: of catch up for real wages having not kept up

480
00:21:47,520 --> 00:21:51,120
Speaker 9: for all of that time, So you know, I see

481
00:21:51,160 --> 00:21:55,280
Speaker 9: every reason to feel optimistic there's a deep question here

482
00:21:55,800 --> 00:21:58,520
Speaker 9: is what was I mean, the big question you just asked, Lisa,

483
00:21:58,640 --> 00:22:02,199
Speaker 9: is is this about apply or is it about demand?

484
00:22:02,920 --> 00:22:05,000
Speaker 9: But actually on the supply side, is it just a

485
00:22:05,000 --> 00:22:09,119
Speaker 9: bad supply shock exiting the system? Or maybe are we

486
00:22:09,160 --> 00:22:12,560
Speaker 9: actually on the cusp of a positive supply shark? Are

487
00:22:12,560 --> 00:22:15,280
Speaker 9: we seeing productivity rise at levels we haven't seen before?

488
00:22:15,400 --> 00:22:18,920
Speaker 9: Are we seeing the economy expand without generating inflation?

489
00:22:19,000 --> 00:22:19,440
Speaker 10: And we are?

490
00:22:19,680 --> 00:22:22,240
Speaker 9: That might be what's going on with the immaculate disinflation.

491
00:22:22,640 --> 00:22:26,040
Speaker 9: And you might say, hey, what caused this positive supply shark?

492
00:22:26,080 --> 00:22:28,280
Speaker 9: And I'm going to tell you, Lisa, I've never seen

493
00:22:28,320 --> 00:22:30,959
Speaker 9: a three year period in my entire history as an

494
00:22:30,960 --> 00:22:34,240
Speaker 9: economist in which I saw this many businesses reorganized what

495
00:22:34,280 --> 00:22:36,720
Speaker 9: they did. We really organized the economy at a really

496
00:22:36,760 --> 00:22:40,600
Speaker 9: fundamental level, everything from work from home to supply chains

497
00:22:40,640 --> 00:22:45,480
Speaker 9: to global shipping roots. And maybe just maybe that's pushed

498
00:22:45,480 --> 00:22:50,000
Speaker 9: back the frontier of what's possible. And I'm optimistic that's possible.

499
00:22:50,000 --> 00:22:53,000
Speaker 9: But I think, perhaps more interestingly for your viewers, I'm

500
00:22:53,000 --> 00:22:55,160
Speaker 9: definitely hearing a.

501
00:22:55,240 --> 00:22:57,359
Speaker 10: Sense from j. Powell and the FED that they're starting

502
00:22:57,359 --> 00:22:58,919
Speaker 10: to believe that maybe is what's happened?

503
00:22:59,320 --> 00:23:00,440
Speaker 1: Are you going to be shocking today?

504
00:23:00,520 --> 00:23:03,840
Speaker 10: Justin, Well, I've got a phone and I've got two

505
00:23:03,880 --> 00:23:07,840
Speaker 10: thumbs and really big wish lists.

506
00:23:07,880 --> 00:23:11,160
Speaker 1: I sure well, good luck with all of that. Justin Wolfers,

507
00:23:11,200 --> 00:23:13,160
Speaker 1: come back again. We love having you on.

508
00:23:13,680 --> 00:23:16,080
Speaker 2: Justin Wolfers of the University of Michigan. Thank you, and

509
00:23:16,119 --> 00:23:25,280
Speaker 2: I have a wonderful holiday.

510
00:23:27,640 --> 00:23:28,720
Speaker 1: Talking about take profits.

511
00:23:28,720 --> 00:23:31,000
Speaker 2: This is really an exciting conversation for me because I

512
00:23:31,040 --> 00:23:32,640
Speaker 2: have been on a kick that if you don't spend

513
00:23:32,640 --> 00:23:34,520
Speaker 2: your points now, you're going to lose them. And we've

514
00:23:34,560 --> 00:23:37,800
Speaker 2: been point savers very much so when it comes to airlines,

515
00:23:37,800 --> 00:23:39,520
Speaker 2: when it comes to hotels, you save them and you

516
00:23:39,560 --> 00:23:41,600
Speaker 2: save me save them and it feels good, but it

517
00:23:41,600 --> 00:23:44,120
Speaker 2: doesn't really. Brian Kelly is here to explain why it's

518
00:23:44,160 --> 00:23:45,960
Speaker 2: a terrible idea to do what I have done for

519
00:23:46,040 --> 00:23:48,800
Speaker 2: so long, founder of the Points Guy. Let's talk about

520
00:23:48,800 --> 00:23:50,560
Speaker 2: points inflation. How real is it?

521
00:23:51,600 --> 00:23:54,240
Speaker 11: Well, Lisa, you're not a point saver, You're a points hoarder,

522
00:23:54,320 --> 00:23:56,720
Speaker 11: and so many Americans are as well. You know, we

523
00:23:56,800 --> 00:23:59,520
Speaker 11: get anxiety when it comes time to redeem them. It

524
00:23:59,560 --> 00:24:01,600
Speaker 11: looks really nice to have a lot of points. But here,

525
00:24:01,720 --> 00:24:05,800
Speaker 11: listen to me. Everyone out there, use your points. You know,

526
00:24:05,960 --> 00:24:08,800
Speaker 11: the airlines have officially become banks. You know, a lot

527
00:24:08,800 --> 00:24:12,240
Speaker 11: of airlines are making more money selling their miles to

528
00:24:12,240 --> 00:24:15,680
Speaker 11: credit card companies than they are by flying planes, which

529
00:24:15,720 --> 00:24:18,359
Speaker 11: means there's more and more miles in the ecosystem and

530
00:24:18,480 --> 00:24:21,000
Speaker 11: the amount of miles it takes to travel is real.

531
00:24:21,119 --> 00:24:24,760
Speaker 11: In fact, Southwest Airlines just announce in twenty twenty four

532
00:24:25,080 --> 00:24:27,159
Speaker 11: their points are going to be worth less when you

533
00:24:27,200 --> 00:24:31,080
Speaker 11: redeem them. So key message, use your points. Now, take

534
00:24:31,119 --> 00:24:33,520
Speaker 11: that cold tart cash that you would have spent on

535
00:24:33,640 --> 00:24:36,040
Speaker 11: the travel and put it towards other things.

536
00:24:36,119 --> 00:24:38,119
Speaker 1: I feel like I have to do some kind of Hi.

537
00:24:38,280 --> 00:24:40,680
Speaker 2: My name is Lisa Brownwitz, and I'm a points order.

538
00:24:40,880 --> 00:24:44,119
Speaker 2: I have a right to improve my standing in the world. Brian,

539
00:24:44,320 --> 00:24:47,520
Speaker 2: how much you seeing companies have to offer perks have

540
00:24:47,640 --> 00:24:51,119
Speaker 2: to offer something to really induce customers to come in,

541
00:24:51,240 --> 00:24:53,920
Speaker 2: especially as you're starting to see discounts to airline prices

542
00:24:53,960 --> 00:24:54,960
Speaker 2: and hotel prices.

543
00:24:55,880 --> 00:24:59,000
Speaker 1: Given people have traveled all they want and now they're

544
00:24:59,119 --> 00:25:00,000
Speaker 1: kind of pulling back a little.

545
00:25:00,200 --> 00:25:00,240
Speaker 8: It.

546
00:25:01,240 --> 00:25:03,880
Speaker 11: Yeah, this is actually really good news for consumers because

547
00:25:03,880 --> 00:25:05,640
Speaker 11: I feel like for the last three years, every time

548
00:25:05,680 --> 00:25:07,720
Speaker 11: I came on and did segments. It was bad news,

549
00:25:07,760 --> 00:25:10,960
Speaker 11: you know, rising airfare. Airfare at one point was raising

550
00:25:11,240 --> 00:25:13,920
Speaker 11: twenty percent month over month, and we thought like six

551
00:25:14,040 --> 00:25:16,919
Speaker 11: or seven percent inflation was bad. So travelers have been

552
00:25:17,000 --> 00:25:20,120
Speaker 11: hit the hardest. Finally we're seeing a reprieve in those fares,

553
00:25:20,440 --> 00:25:23,840
Speaker 11: and the airlines getting hit the worst are the budget

554
00:25:24,119 --> 00:25:27,760
Speaker 11: you know, domestic carriers, because there's still huge.

555
00:25:27,440 --> 00:25:28,600
Speaker 5: Demand for international.

556
00:25:28,680 --> 00:25:31,760
Speaker 11: International airfares, especially in business and first class are through

557
00:25:31,800 --> 00:25:35,480
Speaker 11: the roof. It's domestically where people or where the airlines

558
00:25:35,680 --> 00:25:37,760
Speaker 11: are having trouble, and we're seeing you know, one hundred

559
00:25:37,760 --> 00:25:42,280
Speaker 11: and eleven dollar fares to Puerto Rico this winter, you know,

560
00:25:42,320 --> 00:25:45,080
Speaker 11: sixty nine dollars to Miami. You know two years ago

561
00:25:45,119 --> 00:25:47,600
Speaker 11: you couldn't fathom sixty nine dollars to go to Miami.

562
00:25:47,640 --> 00:25:49,560
Speaker 11: It was, you know, as you know, one of the

563
00:25:49,600 --> 00:25:52,480
Speaker 11: top places to go. So there are good deals out

564
00:25:52,480 --> 00:25:53,680
Speaker 11: there for consumers right now.

565
00:25:54,440 --> 00:25:57,080
Speaker 8: Brian, can you talk a little bit beyond airlines? Where

566
00:25:57,240 --> 00:26:00,280
Speaker 8: are you seeing the greatest points deflation? I guess these

567
00:26:00,320 --> 00:26:04,800
Speaker 8: points give you no benefit over time to hoard. Is

568
00:26:04,800 --> 00:26:07,760
Speaker 8: it beyond airlines? Is it also car points? Points for

569
00:26:07,880 --> 00:26:11,400
Speaker 8: car rentals, points for hotels, and are there differences between

570
00:26:11,440 --> 00:26:12,080
Speaker 8: those sectors.

571
00:26:12,880 --> 00:26:16,120
Speaker 11: Yeah, so let me car rental programs are pretty much useless.

572
00:26:16,560 --> 00:26:18,879
Speaker 11: There's been so much consolidation there. There's only one or

573
00:26:18,920 --> 00:26:21,520
Speaker 11: two main players. You know, with car rental companies, it's

574
00:26:21,520 --> 00:26:23,800
Speaker 11: more about the perks and getting elite status. So if

575
00:26:23,800 --> 00:26:27,080
Speaker 11: you've got an AMX Platinum card, you may get elite

576
00:26:27,119 --> 00:26:31,040
Speaker 11: status with you know, National or Hurts. So that's really

577
00:26:31,080 --> 00:26:33,239
Speaker 11: where I would say, you know, booking directly with car

578
00:26:33,280 --> 00:26:36,280
Speaker 11: rental companies, it's all about recognition, not waiting. In that line,

579
00:26:36,400 --> 00:26:40,080
Speaker 11: the points are pretty meaningless. Hotels are actually pretty valuable.

580
00:26:40,119 --> 00:26:42,760
Speaker 11: I would say World of Hyatt just one best loyalty

581
00:26:42,800 --> 00:26:46,040
Speaker 11: program at the point. Sky Awards. Hyatt's a great program.

582
00:26:46,040 --> 00:26:49,000
Speaker 11: They've been acquiring more hotels and they are a transfer

583
00:26:49,040 --> 00:26:52,040
Speaker 11: partner of Chase. That's the program that I like using

584
00:26:52,040 --> 00:26:54,000
Speaker 11: the most. You can easily get two or three cents

585
00:26:54,040 --> 00:26:57,400
Speaker 11: per point and value. Butt An Area and Hilton are

586
00:26:57,400 --> 00:27:00,560
Speaker 11: also pretty good programs. But here's my key tip when

587
00:27:00,600 --> 00:27:03,080
Speaker 11: it comes to loyalty. Don't be loyal to a hotel

588
00:27:03,280 --> 00:27:06,080
Speaker 11: or an airline. Be loyal to a credit card. The

589
00:27:06,119 --> 00:27:08,239
Speaker 11: credit card companies are where it's at because you can

590
00:27:08,280 --> 00:27:11,800
Speaker 11: accrue points and amex, Chase or built and then you

591
00:27:11,880 --> 00:27:14,280
Speaker 11: transfer them to a number of different partners. And this

592
00:27:14,320 --> 00:27:16,920
Speaker 11: allows you to not just bank with one airline or hotel.

593
00:27:17,240 --> 00:27:19,119
Speaker 11: It gives you a lot of different options when it

594
00:27:19,119 --> 00:27:20,120
Speaker 11: comes time to redeem.

595
00:27:20,560 --> 00:27:23,040
Speaker 8: What about the credit cards that aren't giving you points

596
00:27:23,080 --> 00:27:27,000
Speaker 8: necessarily to spend on travel, But for instance Amazon's credit

597
00:27:27,040 --> 00:27:30,520
Speaker 8: card which gives you credits to spend back at Amazon,

598
00:27:30,800 --> 00:27:33,199
Speaker 8: or other credit card companies that give you points to

599
00:27:33,240 --> 00:27:36,920
Speaker 8: spend at retail how should you be approaching those points systems?

600
00:27:37,560 --> 00:27:40,320
Speaker 11: Yeah, if you want cash back, I recommend just getting

601
00:27:40,359 --> 00:27:42,480
Speaker 11: a straight up cash back card. You know, the City

602
00:27:42,520 --> 00:27:45,800
Speaker 11: double Cash basically gives two percent back, no annual fee.

603
00:27:45,840 --> 00:27:48,720
Speaker 11: That's the gold standard. So instead of getting with one

604
00:27:48,800 --> 00:27:52,520
Speaker 11: retailer that might have some wonky earning. And the Amazon

605
00:27:52,560 --> 00:27:54,679
Speaker 11: card is pretty good actually for those who shop a

606
00:27:54,680 --> 00:27:58,159
Speaker 11: lot at Amazon. But instead of just banking with one retailer,

607
00:27:58,720 --> 00:28:01,919
Speaker 11: get an over a cash back card that gives you

608
00:28:01,960 --> 00:28:04,280
Speaker 11: flexibility because if you get cold, hard cash, you can

609
00:28:04,400 --> 00:28:07,440
Speaker 11: use it if you want travel or on anything else.

610
00:28:07,600 --> 00:28:09,160
Speaker 5: Versus with just one retailer.

611
00:28:09,440 --> 00:28:12,959
Speaker 2: It strikes me that why should any company, why should

612
00:28:13,080 --> 00:28:16,600
Speaker 2: a delta United American try to cater to their loyal clients.

613
00:28:16,720 --> 00:28:18,760
Speaker 2: If this really is the business model, if it's really

614
00:28:18,920 --> 00:28:23,080
Speaker 2: just about them being an arm, a loyalty arms tied

615
00:28:23,119 --> 00:28:26,880
Speaker 2: to a credit card company, well.

616
00:28:26,680 --> 00:28:27,159
Speaker 5: Think about it.

617
00:28:27,200 --> 00:28:28,960
Speaker 11: You might only fly a couple times a year, but

618
00:28:28,960 --> 00:28:31,560
Speaker 11: you're using your co branded credit card every single day.

619
00:28:31,720 --> 00:28:32,680
Speaker 5: And that's where I think.

620
00:28:32,720 --> 00:28:36,240
Speaker 11: Delta, in their recent earnings said one percent of total

621
00:28:36,760 --> 00:28:40,800
Speaker 11: GDP spend in America's on a Delta co branded AMEX card.

622
00:28:41,080 --> 00:28:43,920
Speaker 11: So think about that, even that infrequent traveler, Delta's earning

623
00:28:43,960 --> 00:28:45,960
Speaker 11: money when you go to the grocery store, when you

624
00:28:46,000 --> 00:28:48,960
Speaker 11: pay for all your expenses in your life. So it's

625
00:28:48,960 --> 00:28:51,760
Speaker 11: a brilliant business model to bring people in, to give

626
00:28:51,800 --> 00:28:54,040
Speaker 11: them these points, and then encourage them to fly on

627
00:28:54,120 --> 00:28:58,480
Speaker 11: the airline, letting them board early. So I will just say,

628
00:28:58,520 --> 00:29:01,720
Speaker 11: while there's been devalue euation and currencies, it costs more

629
00:29:01,760 --> 00:29:05,200
Speaker 11: miles than ever before, you could also earn more miles,

630
00:29:05,280 --> 00:29:07,760
Speaker 11: you know, and the US is very particular. You can

631
00:29:07,800 --> 00:29:10,840
Speaker 11: get one hundred thousand points sign up bonuses earning four

632
00:29:11,080 --> 00:29:15,200
Speaker 11: x five x in certain categories. So not all is lost.

633
00:29:15,320 --> 00:29:17,360
Speaker 11: You just got to play the game correctly and use

634
00:29:17,400 --> 00:29:19,640
Speaker 11: the credit cards that reward you where you're spending the

635
00:29:19,640 --> 00:29:20,200
Speaker 11: most money.

636
00:29:20,320 --> 00:29:24,120
Speaker 2: What's the most extravagant trip you've ever taken using only points?

637
00:29:24,760 --> 00:29:26,040
Speaker 7: Oh?

638
00:29:26,120 --> 00:29:28,880
Speaker 11: Well, I do love ems emrits first class on the

639
00:29:28,880 --> 00:29:31,680
Speaker 11: eight three eighties and iconic experience. I took my parents

640
00:29:31,760 --> 00:29:34,640
Speaker 11: on an around the world trip and you know, they've

641
00:29:34,640 --> 00:29:37,040
Speaker 11: got a big on board on board bar, and my

642
00:29:37,120 --> 00:29:39,240
Speaker 11: dad and I were drinking I think three hundred dollars

643
00:29:39,560 --> 00:29:39,960
Speaker 11: a goal.

644
00:29:40,600 --> 00:29:43,120
Speaker 8: Okay, Brian is we flew over.

645
00:29:43,000 --> 00:29:46,280
Speaker 11: The Pimalayas and it was like two hundred bucks out

646
00:29:46,280 --> 00:29:48,080
Speaker 11: of pocket and taxes and fees. It was we were

647
00:29:48,080 --> 00:29:50,320
Speaker 11: getting that first class experience cheaper than what people paid

648
00:29:50,320 --> 00:29:50,680
Speaker 11: in coach.

649
00:29:50,760 --> 00:29:52,760
Speaker 5: And that's why I love points.

650
00:29:52,360 --> 00:29:54,680
Speaker 1: All right, Kelly, founder of the Points Guy. We all

651
00:29:54,720 --> 00:29:55,400
Speaker 1: aspired to be you.

652
00:29:55,440 --> 00:29:57,720
Speaker 2: Brian, thank you so much for being with us, flying

653
00:29:57,760 --> 00:30:01,240
Speaker 2: around the world with his parents drinking three hundred dollars.

654
00:30:02,200 --> 00:30:03,000
Speaker 1: Commemorates air.

655
00:30:03,280 --> 00:30:06,720
Speaker 2: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify, and

656
00:30:06,760 --> 00:30:10,200
Speaker 2: anywhere else you get your podcasts. Listen live every weekday

657
00:30:10,240 --> 00:30:12,800
Speaker 2: starting at seven am Eastern on Bloomberg dot Com, the

658
00:30:12,880 --> 00:30:15,120
Speaker 2: iHeartRadio app Tune In, and the.

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Speaker 1: Bloomberg Business app.

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Speaker 2: You can watch us live on Bloomberg Television and always

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Speaker 2: on the Bloomberg Terminal. Thanks for listening. I'm Lisa Abramowitz,

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Speaker 2: and this is Bloomberg