WEBVTT - McGee Sees Resilient Consumer, Inflation Concerns

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<v Speaker 1>This is Bloomberg Business Week with Carol Masser and Bloomberg

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<v Speaker 1>Quick Takes. Tim Stinovic on Bloomberg Radio. All right, on

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<v Speaker 1>the Bloomberg terminal, we talked about this story Jared Dillion,

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<v Speaker 1>Bloomberg Opinion Columns. He writes that Americans are talking themselves

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<v Speaker 1>into a recession. We're already seeing that in the housing market.

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<v Speaker 1>Tim u s home sale cancelations jumping in June, roughly

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<v Speaker 1>sixty deals falling through. That's about fift of homes that

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<v Speaker 1>entered into a contract according to Redfin. We're wondering what

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<v Speaker 1>the consumers up to. Yeah, what is the consumer up to,

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<v Speaker 1>especially ahead of Prime Day and what's actually going on,

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<v Speaker 1>you know with marketplace sellers when it comes to prime day.

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<v Speaker 1>For that, we turned to Tom McGee, the president and

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<v Speaker 1>CEO of I C s C. Tom joins us on

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<v Speaker 1>the phone from Los Angeles. Tom good to have you

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<v Speaker 1>with us. He should note that I C s C

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<v Speaker 1>promotes as you meant as you write on the website

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<v Speaker 1>and elevates the marketplaces and spaces where people shop, dine,

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<v Speaker 1>work and play. So think brick and mortar. Here. Give

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<v Speaker 1>us an idea, Tom, of of what you're thinking and

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<v Speaker 1>what you're seeing right now as we look across the

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<v Speaker 1>economic landscape and try to get an understanding for the

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<v Speaker 1>shifting way that people are spending money. Well, good afternoon,

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<v Speaker 1>Thanks for having me on High, Tim High Carroll. Uh,

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<v Speaker 1>it's good to be with you again. Look, I think

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<v Speaker 1>the consumer has been exceptionally resilient UM over the course

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<v Speaker 1>of obviously the last couple of months, where a placent

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<v Speaker 1>concerns have been you know, significant and heightened. You know,

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<v Speaker 1>I do think that will continue to see strong retail

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<v Speaker 1>sales over the next you know, a few months. You

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<v Speaker 1>still have a high level of personal savings and the

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<v Speaker 1>job market is strong UM. But you know, I think

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<v Speaker 1>if inflation continues to be UM, you know, front and center,

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<v Speaker 1>and continues to be at the levels that it is today,

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<v Speaker 1>of course, at some point it's going to have a

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<v Speaker 1>negative impact upon consumer spending. Right now, you know, you

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<v Speaker 1>still have those strong underlying um, you know, considerations of

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<v Speaker 1>personal savings and jobs and that's going to drive you know,

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<v Speaker 1>continue drive to spend, and you know that bolts in retail,

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<v Speaker 1>but also in experiences. I mean, it is the summertime

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<v Speaker 1>and we've all you know, experienced and witness what's happening,

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<v Speaker 1>you know, with the traffic at the airports, that on planes, etcetera.

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<v Speaker 1>So there's a lot of folks spending money on experiential

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<v Speaker 1>type of things, whether there's travel or going out to

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<v Speaker 1>doing the things that they like to do in the

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<v Speaker 1>summer and to many extent haven't been able to do

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<v Speaker 1>for the last couple of years. Well, do you feel like,

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<v Speaker 1>toime your members are feeling a little like they're a

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<v Speaker 1>little cautious looking at the second half of the year

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<v Speaker 1>and maybe into because I agree him and I've spent

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<v Speaker 1>more time in the airport than we have in the

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<v Speaker 1>last couple of years in a big way, they can

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<v Speaker 1>convert some of the space, you know, empty retail space

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<v Speaker 1>around to bigger airports. Because we are a seriously person

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<v Speaker 1>that seem yeah, exactly. And so I just I wonder

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<v Speaker 1>what your members are saying that people would rather travel

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<v Speaker 1>right now than maybe go buy some more clothes or

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<v Speaker 1>stuff for the home. Well, I think generally speaking, you

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<v Speaker 1>know when people you know, in a in a in

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<v Speaker 1>a normal environment, you know, pre HOVID, pre inflation concerns, etcetera,

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<v Speaker 1>that you know, when you have a high level of

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<v Speaker 1>travel and experiential type of spend that generally was good

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<v Speaker 1>for retail. I mean, when people are out and they're

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<v Speaker 1>spending and their vacationing, they're going to buy a lot

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<v Speaker 1>of stuff and that's generally good for retailing. And of

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<v Speaker 1>course a lot of retail centers are you know, places

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<v Speaker 1>where people go, um, you know, it's been those experience

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<v Speaker 1>with dollars. So I think generally speaking, you know, that

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<v Speaker 1>type of spend is not negative for for retail. I mean,

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<v Speaker 1>obviously there's ebbs and flows as a relates to the

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<v Speaker 1>time of the year and so forth. I think the

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<v Speaker 1>level of concern, you know, I think as it relates

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<v Speaker 1>to the industry and the broader consumer is just you know,

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<v Speaker 1>the thing that we all have um a level of

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<v Speaker 1>concern around, which is inflation. And you know, if this

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<v Speaker 1>continues at the current rate, that is you know, history

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<v Speaker 1>is going to be our guide and that's always been

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<v Speaker 1>a negative over the long run for consumer spending and

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<v Speaker 1>obviously for the economy. If we're able to get inflation

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<v Speaker 1>under the control under control and the ands able to

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<v Speaker 1>advigat a soft landing, that will you know, I think

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<v Speaker 1>right now that consumer continues to be resilient and strong. Hey,

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<v Speaker 1>tom one day. I want to ask you because there's

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<v Speaker 1>a fair amount of stores just around Bloomberg headquarters in

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<v Speaker 1>New York City that are still vacant. There used to

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<v Speaker 1>be more. I was going to say, yeah, but the Republic,

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<v Speaker 1>the containers, there's a lot of them that are gone.

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<v Speaker 1>Talked to us about delinquency rates um that play into

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<v Speaker 1>the retail sector CNBS loans. I'm thinking specifically, are we

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<v Speaker 1>seeing any kind of fall up? You know, actually that's

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<v Speaker 1>improved dramatically and you're really at very um you know,

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<v Speaker 1>strong levels today. The level of delinquency has dropped it

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<v Speaker 1>in the in the CMBs loan market, I think it's

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<v Speaker 1>under seven percent today. In June number was approaching, so

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<v Speaker 1>that that market has strength and considerably and quite frankly right,

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<v Speaker 1>collections as an industry or are in the low nine

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<v Speaker 1>percent I think nine eighty last number size and a

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<v Speaker 1>few days ago, So I don't. I don't. Generally speaking,

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<v Speaker 1>the inter streets are very strong footing because consumers are

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<v Speaker 1>spending and they're they're going out to shop at stores

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<v Speaker 1>and they're going out to shop online. I mean, consumer

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<v Speaker 1>spending is strong. Now, you mentioned New York and obviously

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<v Speaker 1>New York is a particularly you know, it's a unique market,

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<v Speaker 1>and it is you know, it's significantly impacted by what's

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<v Speaker 1>happening in the broader um you know, work environment and

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<v Speaker 1>quite frankly the stresses that are people coming back into

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<v Speaker 1>the coming back into the office. So it's that's particularly

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<v Speaker 1>midtown that's a big driver of retail spence. So New

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<v Speaker 1>York is unique relative to the rest of the country.

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<v Speaker 1>A Tom thirty seconds Left weigh in on the power

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<v Speaker 1>of Amazon Prime Day away from Amazon and how it

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<v Speaker 1>has turned into a shopping day outside of Amazon to

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<v Speaker 1>for for your your clients, your members, just really quickly. Yeah, yes,

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<v Speaker 1>it's become an iconic shopping day. And so you you know,

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<v Speaker 1>Target deal days and and a whole host of other

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<v Speaker 1>retailers are having similar type of events, and so it's become,

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<v Speaker 1>you know, in other iconic shopping day, just like Black

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<v Speaker 1>Friday in other days in other parts of the year.

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<v Speaker 1>It's more than one day, right, it's a couple of

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<v Speaker 1>days or something. It's now an event. Carol, I have

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<v Speaker 1>been I have been bombarded by offers. What are you

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<v Speaker 1>going to buy? Things? I must have? What must have

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<v Speaker 1>you have? What must you have? Look away, look Away,

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<v Speaker 1>that's what I'm doing. I got enough stuff in my

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<v Speaker 1>life right now. Tommygee, always a pleasure, President and CEO

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<v Speaker 1>of I C s C, on the phone from l

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<v Speaker 1>A