Is Consumer Spending Maxxed Out?

Investment Analysis Clubs Macro Economic Trends and Risks
1

Why It Matters: A reduction in household credit card spending might signal that consumer demand is softening.

In terms of expenditure categories, online shopping and department stores grew the most, while airlines, furniture and lodging were the weakest, indicating that leisure service spending may have peaked. Durable goods spending continued to steadily decline. Bank of America’s economists now expect a tepid April retail sales report.

Perhaps we are on the cusp of a recession.
Target & Walmart will be reporting on sales this week.

Monthly retail sales and quarterly results from the likes of Walmart (WMT) and Target (TGT) will provide a detailed update on the state of the consumer in the week ahead as investors also keep a close watch on debt ceiling developments out of Washington.

Retail sales and quarterly earnings from Home Depot (HD) Tuesday morning will set the tone for a crowded week of updates on consumer spending trends.

1 Like
2

If people are cutting back, it’s because the media is screaming “recession, Recession, RECESSION”. Over the last 40 years, consumers reaching the end of their financial tether, has been met with “innovative” lending schemes, extended payment periods, and higher limits on credit cards.

Steve

1 Like
3

We went to what was our favorite southen food place. We had Sysco supplied chicken fried steak, a small scoop of Sysco supplied broccoli and small scoop
of sweet corn. We paid close the 40
dollars for the privilege of being ignored and eating mediocre food at best.

We are finding less and less value, we are seeing prices across the board rise. Hoa fees driven by insurance and insurance has driven up our housing cost by close the 40 percent over the last year.

We have seen auto insurance increase by close the 30 percent. Food prices have increased. The money we may have spent on travel or a boat is gone. Eating out is being rationed. (Not much)

We are just about finished with the Condo remodel and have secured most of the furniture, although a dining room set is not out of the question.

It doesn’t take recession to tap people out. Last year I probably knocked down about 20 percent of my wages in over time. This year maybe 3 or 4 percent. So add in a 15 percent reduction of cash flow and a mandatory increase in outflow and discretionary spending gets hit hard.

One does not need television or any other news outlet to get me to cut back spending.

Cheers
Qazulight

4 Likes
4

So, you had $20 worth of meal, and $20 worth of “atmosphere” in the restaurant?

I used to have a $5 limit on what I would pay for a meal. Now, it’s $10. A Wendy’s salad, by itself, is now $9. I am sure the “JCs” will tell you it’s all the fault of their “ungrateful” employees that want to be paid better, or they leave for someone who will pay them better.

There are deals to be exploited. And there is the “pure dumb luck” factor.

I mosied in to Tim Horton’s for lunch the other day. Asked the girl if they had the chicken for a chicken panini, as they have been out of the chicken, among other things, recently. The manager spun around, asked if I wanted a couple Chipotle chicken wraps. Seems a customer had ordered them, tired of waiting, and left, without the wraps. The wraps had only been sitting there for a couple minutes, they were still warm. I eyed the menu price, something over $5 ea, and asked how much. The manager said she would give them to me free. OK. I did pay for a Coke, which was $3 (wow!), and had more lunch than I planned. (the wraps were tasty, but a bit spicy for my taste)

Wendy’s has a survey offer on the back of their receipts offering a free burger with the purchase of a burger, for doing the survey. I mosied over to the drive-up for my burgers. I had to wait for the burgers to be cooked so pulled ahead and waited. The girl emerged from the store with a bag containing a burger and large fries. Not mine, I only had the two burgers on the order, no fries. She took the bag to the other car that was waiting. Not theirs either. She went back into the store. Emerged with the same bag, now containing two burgers, and the large fries, and gave it to me. So, for the price of one burger, I had two burgers and the large order of fries. (the girls at this Wendy’s are super nice, but this store, the one that was closed entirely for much of last year, has severe operational problems)

Arby’s is currently offering (2) roast beef and cheddar sandwiches for $7. Being an old phart, I also can get a geezer pop for 50 cents (geezer pop at Wendy’s is free)

I don’t pay for “atmosphere”.

Steve

2 Likes
5

If you really ask them, they will tell you that everything is costing them more. Food supplies, labor, insurance, taxes, utilities, kitchen equipment, bookkeeping, etc.

2 Likes
6

Everything comes down to labor. Even the basic inputs for the lettuce and tomatoes that Tim’s was out of a week ago: sunlight, dirt, and water, are pretty much free (assuming the dirt is a sunk cost), so the one variable is labor. According to the “JCs”, it is always the worker’s fault.

Steve

7

I got a haircut last week. Next door to the barber is Papa John’s and on the other side is Subway. I stopped by Subway first and asked for the price of a standard 12" cold-cuts sub. It was over $11. WAY over what I was willing to pay AND no specials/deals. So, over to Papa John’s and got an 8" square brownie (still HOT !!) for $9+.

8

Little Caesar’s pizza here in Michigan used to feature it’s “hot and ready” pizzas, cheese or pepperoni, for $5.00. They finally yielded a year or two ago and broke the $5 barrier. Mickey D’s offered any size soft drink for $1, for years. As of, iirc, 2021, a big Coke, with Michigan 6% sales tax, is $1.37.

On the other hand, if you buy anything at Burger King, they also have a survey offer on the back of the register tape: take their on line survey, then order a fry and pop, and get a Whopper free. I can’t remember the exact total, but, with that offer, I can get a small fry, small pop, and a Whopper, for $5 and change.

Steve

9

Maybe they are using devalued money. :wink:

The Captain

2 Likes
10

Yes, the answer is clear:

Or maybe not.

For the month:

IMG_0344
IMG_03441194×1668 123 KB

2 Likes