Where consumers are deciding to cut back

Jeffrey Roach Chief Economist at LPL Financial, joins TheStreet to discuss what changes he’s seen in consumer spending habits.

Transcript

00:00So as an economist, as you look at the broad spectrum of spenders, with extra savings dwindling,

00:07especially as you said on the low income scale, do you see where consumers are starting to choose

00:16to cut back and tweak their spending? Well, we've seen a pullback in some of those big

00:22ticket items. So furniture, for example. So you also have cars. Now car sales have

00:32stayed pretty elevated, but we know from the amount of incentives that really dealers are

00:39starting to see a little more pressure on the consumer and really to entice them to come on

00:44the lot, they have to put a little more of those incentives. So the incentive as a percentage of

00:50average transaction price is increased a little bit. I think those are some of the leading

00:54indicators where you're starting to see the beginnings of a slowdown. Again, this is not a

00:59massive type of recessionary type slowdown, but a slowdown nonetheless. And do you see any areas,

01:07especially in terms of luxuries, where people, despite the falling savings rate,

01:11still want to spend their money on? Well, we still see some pretty strong demand for travel.

01:17You look at the throughput data that the TSA puts out, so you can track the number of folks

01:22that are going through securities stations throughout the country. And travel has certainly

01:28been very, very strong. We continue to break new and new records on the amount of travel.

01:36And so it seems as if that component is remaining pretty solid. And of course,

01:41we're at peak travel season right now, so it's important to compare apples to apples here. So

01:47you compare at this stage of the summertime relative to previous years. Demand for travel

01:53is still strong. That's certainly going to be good news for restaurants, for those in the

01:58accommodation sector, the hotels, et cetera.