00:00What is happening in terms of this disappointment?
00:04Like, why are we at these record lows?
00:06Is it all about higher prices?
00:09It's really about cost of living and affordability.
00:11That's what the consumers are telling us very loud and clear throughout the interviews.
00:15Consumers remain very frustrated by the persistence of high prices.
00:19But what's new in this year is that consumers have definitely perceived that labor markets are weakening.
00:25We had a surge in the share of consumers spontaneously telling us that weakening incomes now were dragging down their personal finances.
00:33And we also have weakening labor market expectations going forward.
00:38We have over two thirds of consumers expecting unemployment rates to rise in the year ahead.
00:43Joanne, how will that differ when it's the start of 2026?
00:47Let's say the employment picture stays the same as is.
00:49That is low firing, low hiring.
00:51But all of a sudden we get tax rebates.
00:54We get maybe $2,000 checks as a tariff refund.
00:57What would that do to a consumer at this moment?
00:59Is this a consumer that has a higher propensity to save or to spend it?
01:04Right now, consumers perceive quite a bit of weakness in the economy.
01:07And certainly if they were to get any extra cash in their pocketbooks, they would absolutely welcome it.
01:12But when that cash runs out, if the situation hasn't materially changed, they will continue to be frustrated about high prices.
01:19Now, consumers, you know, a few months ago were expecting very much a worst case scenario to come after the implementation or after the initial announcement of the major tariffs in April.
01:30That hasn't come to pass, but consumers are still wary.
01:33They're still worried that things are going to get worse before they get better.
01:35You see a split, right?
01:38Your micro cuts show middle income households reporting worse finances.
01:44Affluent cohorts are riding market gains.
01:48What specifically is a problem here?
01:52Is it food at home, that cost that's too high?
01:56Is it auto insurance or auto repairs, that cost that's too high, rent or mortgage that's too high?
02:02What are they looking at?
02:03Honestly, it's all of the above.
02:05It's going to be different things for different consumers.
02:07Consumers, when we ask them about their buying intentions, is it a good time to buy a big ticket item, say a car or durable goods for your house?
02:17Overwhelmingly, consumers are pointing at high prices.
02:20Many are also pointing at high borrowing costs.
02:22That has ticked down just a touch after the most recent rate cut, but not by a ton.
02:27When it comes to the pain of high prices, different consumers are mentioning different things.
02:31We're seeing references to food.
02:35We're seeing some references to insurance, housing costs, all of the above.
02:40Unfortunately, consumers are just frustrated across the board with high prices.
02:44I'm just trying to understand if there were one thing that could change or improve sentiment, what would it be?
02:53I think that one thing that could be a major wild card is if tariff policies were rolled back.
02:58One of the things that continues to worry consumers, we have over half of consumers spontaneously citing, giving us comments about tariffs.
03:09Tariff rhetoric developments have obviously calmed down quite a bit since April and May,
03:13but consumers are still wary and apprehensive about the idea that inflation could rise in the future as a consequence of these tariffs.
03:23If these tariffs were to disappear or to be permanently adjusted to a lower level than they are now,
03:32that is something that could very well shape consumer beliefs about the future.
03:37Joanna, when it comes to this consumer, Matt and I have talked a lot this year about the record level of ownership of households to U.S. equities.
03:46Historically speaking, what is the sensitivity of this consumer right now to what's happening in markets,
03:51especially if we get more days like yesterday where stocks have some real momentum to the downside?
03:57In spite of the fact that American consumers are increasingly participating in stock markets,
04:05as it turns out, these short-term movements in stock markets really only affect those with large portfolio exposures.
04:13In midway through the month, at the beginning of November, the consumers with the largest third of stock holdings
04:20were the only demographic group to see an increase in sentiment.
04:24And over the two weeks thereafter, their sentiment was completely, those gains were wiped out.
04:30So essentially, sentiment is little change for this top stock holding group.
04:35For other consumers, they're not really paying attention to day-to-day, week-to-week movements in the stock markets.
04:43It's really those with large portfolios, with high exposure to the stock market,
04:46who have been supported by strength in the stock market over the course of this year
04:51and appear to be responding to the weaknesses we've seen recently.
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