00:00So I would use a different word. I would use the word nimble for consumers.
00:04Consumers have been hit with a number of shocks over the last few years,
00:08and they have managed to navigate those shocks remarkably well.
00:12And I think it's because the shocks have not been uniform in terms of the basket of spend.
00:16So they've had some flexibility in terms of how to figure out where the prices are rising,
00:21where they're seeing more discounts, and they're gravitating to where they find the most amount of value.
00:27It's pretty remarkable to see.
00:28I love your marketing at MasterCard.
00:30She used to write normal reports for Bank of America.
00:33Now she's at MasterCard, AI-enabled traveler.
00:38I mean, it's fun.
00:39What is an AI-enabled traveler?
00:41I still love talking about the Federal Reserve, but it's fabulous to also talk about these broader themes in the
00:49economy
00:50and what we can see in our own incredible data set.
00:54But we did a huge MasterCard report on travel.
00:56We did.
00:56We did.
00:56So it's called the Travel Equation.
00:59It's around three forces that are driving travel in this economy.
01:02Macro, particularly geopolitics, machines, which would be AI, and then motivations, which is where you want to go,
01:08the personal motivations that drive travel.
01:10And one of the things that was really remarkable that we were able to clean from our data is to
01:15be able to understand how consumers that are utilizing AI,
01:20so we separate into two cohorts, the consumers that have AI subscriptions and a matching set of cohort of consumers
01:26that don't.
01:27And you can see how they're traveling differently.
01:29First of all, those that are using AI subscriptions spend more of their budget towards travel.
01:35And then they go to places that are off the beaten path, like things you would never have known or
01:40cities that you were not necessarily aware of.
01:42You're seeing a very high share of tourist spending in those cities from that AI subscriber bucket.
01:47So it's fascinating to see how consumers are embracing AI to find new places to travel that have more value,
01:55especially in a world with high inflation.
01:57I mean, Paul Sweet is the only one here with a real life.
01:59I do.
02:00The kids are using it.
02:02The kids?
02:17The biggest increase in bookings for the summer is Dublin.
02:20Yep.
02:20There you go.
02:21So prove it out.
02:22The kids, a couple years ago, it was Barcelona.
02:24Now, yeah, I don't know where everybody's going.
02:26But how about, there's a lot of tension in the world here in the Middle East.
02:30Of course.
02:31Are people adjusting their travel to reflect that?
02:34Of course.
02:35Of course.
02:36And that's critical, right?
02:38When you think about the overwhelming force that's out there in terms of travel, it is very much geopolitics and
02:45it's the cost of travel.
02:46And that's what consumers have to manage in terms of where do they go from a safety perspective, where do
02:51they go from a cost perspective, how do they think about the availability of flights.
02:55All of those are critical parts of the equation in North America, in the U.S., but even more so,
03:02of course, if you're staying in the Middle East or throughout Asia.
03:04Are Canadians not coming down to Florida or going to Arizona when it gets cold?
03:09Is that still an issue?
03:10I think that, you know, you're seeing Canadians flock to warmer weather, whether that's Florida, Arizona or Mexico.
03:17But, no, you're still seeing a lot of movement.
03:20All right.
03:20So, we've got, I'm going to go back to your old well here.
03:24Yeah.
03:24We've got a new Federal Reserve chairman here.
03:26What is he going to do with his Federal Reserve?
03:28Because presumably he's got a little bit of pressure from the administration to bring rates down.
03:33But the data just isn't there, is it?
03:37So, we'll see.
03:38I mean, I think that's the reality is that we are in wait and see mode.
03:41And that's probably the right place to be because we have to determine how the increase in energy prices will
03:46feed through the economy.
03:48So, there's both growth dynamics and inflation dynamics.
03:51So, I think for the Fed to sit and monitor the data and try to understand the transmission of the
03:57shock into the economy is absolutely the right approach.
03:59And the committee has made that very clear.
04:01They've been very vocal in terms of where they see those risks.
04:05We had multiple dissents in the last meeting.
04:08Very active commentary coming out of the Federal Reserve talking about those that are leaning more towards potentially a hike
04:14being the next move.
04:15Those still in the cut camp.
04:17But most that are just saying we have to see how things play out.
04:21I don't have the chart in front of me, but I saw a chart yesterday from the Federal Reserve Bank
04:25of San Francisco that showed the flow of people, in a way, losing their job, moving in transition from employment
04:33to unemployment.
04:34And for the younger cohort, it was shocking, the decline in jobs, the flow out of employment into unemployment.
04:43What is MasterCard seeing on the stresses on the labor front?
04:49I mean, for us, of course, just looking at the public labor market statistics, just like you are in terms
04:54of the BLS data, the flow data, the JOLTS data, jobless claims.
04:59So specifically to the stat that you referenced in terms of the flow of labor in and out of unemployed
05:06cohorts, earlier in the year, and really actually last year, we did see the younger cohort, higher educated, seeing a
05:15higher duration of unemployment.
05:17The last few months, that's actually come down.
05:19So I think given what we're seeing in terms of very low unemployment rate, 4.3% unemployment rate, the
05:26ratio of job openings, the number of unemployed is remaining pretty low, pretty stable.
05:30It feels to me that we're in a labor market that is pretty, frankly, stable.
05:36And you're seeing the right amount of movement in the workforce.
05:39Now, obviously, it's not even, it never is, but on aggregate, about private sector job creation running at $68,000
05:46a month for the last six months, the unemployment rate, again, holding low, wage growth serving to be pretty steady.
05:53It feels like a stable labor market.
05:54At MasterCard, you get some unique data, presumably, how the consumers are really spending the money.
06:01Is anything jumping out at you that might be a little different than maybe we would have thought here?
06:05Because we do have this K-shaped economy.
06:07I'm not sure if you see that in your data.
06:09So, I mean, I have a lot of views around the K-shaped narrative, which we don't need to go
06:13into right now.
06:14But in terms of what we're seeing for the total picture in terms of overall spend, of course, we saw
06:21a big increase in spending at the pump.
06:22So if you look at spending on fuel and convenience running about 20% positive on a year-over-year
06:27basis, and that showed up very quickly once gas prices rose.
06:30So that's the pass-through of higher gas prices to the pump, to the consumer.
06:35And then if you look at the broader basket of spend, consumers are still spending at a pretty decent clip
06:41in other categories.
06:42You're not really seeing a cutback, particularly in areas that you would think, like discretionary spending for restaurants.
06:47That's holding.
06:48Okay.
06:48This is important.
06:49And, folks, we've got to run.
06:50We're out of time.
06:51But with Michelle, this is important.
06:54Are we more aware of the K-shaped agony because of our new social media, our new discourse, our new
07:02communication versus 50 years ago or 150 years ago?
07:08Because you're optimistic.
07:09And I hear this from people.
07:10It's just not that bad out there.
07:12And yet we're hearing it's bad out there every tick of the day.
07:15Well, of course.
07:16There's the headlines that are coming in fast and furious across the board.
07:19And then there's the data.
07:20And when you actually look at the numbers and you see how people are spending and how businesses are investing,
07:27you see an economy that is still moving forward.
07:29And that's why, for us, having this purview of looking at the data, it makes all the difference.
Comments