00:00Well, they have more kids to give to grandkids specifically. I certainly fall into that category. So they're going to be sharing a little bit more of those holiday spending associated with that. They're obviously aware of the prices that we're seeing and the inflation that has taken into effect. But this is that stage of life when we see boomers and, you know, largest generation to come along until the millennial generation. Yes, they have that wealth and they're going to spend it.
00:26I hope your grandkids are listening. And if they are, they're probably very excited about what's to come for Christmas, Wayne. When it comes to younger generations, though, we've heard some of corporate America start to express concerns. Chipotle and Shake Shack stand out as to saying our results weren't as good because people under the age of 30 just aren't spending as much. Are you also seeing that trend that younger people, especially with a higher jobless rate, are pulling back on spending?
00:50I think that there is some moderation that's definitely going on. The good news is if they're working and if they have a house, they're certainly doing very well in terms of their picture.
01:00And also, we have to look at the level of indebtedness of consumers. And when you look at that as a share of income, it's actually also pretty positive. It's lower than where we were pre-COVID.
01:08So there is the might behind it. It's just that consumers have to have the confidence that moving forward, they're likely to remain employed and be able to spend in that regard.
01:18We have, you know, kind of a bullish outlook in terms of holiday spending. I think you expect a 4.6% year-over-year rise. At the same time, I got a note from Torsten Slock of Apollo today saying that 25% of Americans are subprime.
01:37And we've been talking about for weeks now the fact that 42 million Americans are on food stamps. How do you sort of juxtapose those two sides of the coin?
01:52Sure. So I think I'll start first with the holiday sales number. You asked 4.6% versus 4.3% last year.
01:59And it's important always when you talk about holiday sales to understand what the definition is. We're looking at November and December, retail sales, less autos, gas and restaurants.
02:10That's specifically, and it's a non-seasonally adjusted number. So that's a common metric that's used there.
02:15But if we break that down into the real spending, taking out the inflationary component, the growth is much slower. Obviously, 2.2% is what we're expecting.
02:24That's down from 2.5% last year. So we have adjusted some of our forecast, given the challenges that remain with regards to subprime audiences as well as the government shutdown.
02:36That'll be an important factor as we lead into the season.
02:40Wayne, when you look at the upper echelon of consumers, the people that we've seen reflected, for example, in the airline earnings and travel, how price sensitive are they at the moment?
02:49Across the board, are consumers still willing to pay more, or are you seeing softness there?
02:54I think what you see is that obviously the wealthy are going to be looking for a bargain also.
03:01And let's remember, for all consumers, we've got more tools available to us now than we ever have before, not only consumers but also small businesses.
03:10If something's going up in price, I can price shop it now, sort by price, and I can find something online that's much better and at a cheaper price.
03:18So I think the sensitivity is absolutely there, even for the wealthy, and that's going to play importantly, especially as we continue to look into the holiday season.
03:26Consumers, again, are expected to spend about 10% more on gifts overall, but the boomers are going to see about 21% lift.
03:36So, again, a lot more spending that can occur in this holiday season.
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