00:00Back to school is still a thing, and the headline number is school spend is up 6%.
00:05But the way that I think about it is you really have to unpack that, and the devil's in the
00:10detail.
00:11So the average says the consumer is going to be spending more.
00:14But if I look at 10 consumers and how they're thinking about it,
00:18you have basically four of those consumers are going to spend more,
00:22four of those consumers are going to spend about the same,
00:25and two of them are going to spend a little bit less, and that all nets out to about 6%.
00:29So it's really interesting to see that of those consumers, there really is a discrepancy across the mix.
00:37We had an economist in here in your seat just about an hour ago who said,
00:41they think the K-shaped economy is becoming less pronounced.
00:46Do you see that?
00:47It's funny because I was thinking we're doing back to school,
00:49and there's a lot of other letters in the alphabet than K.
00:52I definitely think there is, you still see this, there's the haves and the have-nots,
00:57and then there's kind of the steady of the ship, which is a very large component right now
01:01of at least back-to-school spend because that's not even, that's not really discretionary.
01:05That's quasi-utilitarian spend.
01:07But what I really like to see is when I look at the fringes of the data.
01:11So if I continue to unpack those 10 consumers, there's four that are spending more.
01:15What are they really doing?
01:17Two of those consumers are making tradeoffs.
01:19So they're going to spend less going out and dining out, and they're doing things at home.
01:23They might stop to do those vacations that they were doing over the summer.
01:28There's one of those that are making sometimes kind of like not sustainable choices,
01:32like dipping into spending.
01:34But there's one, and this is the one that I kind of think they're taking my survey
01:37and rolling their eyes a little bit of, you know,
01:39I don't need to change my behaviors to spend more on school.
01:42So that's one in 10 consumers saying that across tuition.
01:46So when we ask tuition hikes, there's a question in our survey about that.
01:49There's something about the soccer spend.
01:51So it's no joke, the three kits, the cleats, the shin guards,
01:55the kind of training, you know, of the after-school enrichment activities after tutoring.
02:00Enrichment, that's what athletics is called at KPMG.
02:04And it's kind of half and half.
02:05So we could either pay for tutoring or they're probably doing both
02:08because it's a multi-select question.
02:10But, you know, half of the parents that, you know, pay for enrichment activities,
02:15they're spending on enrichment.
02:17You're going to kill me.
02:18We have a lot of thought going into the work.
02:19The biggest scam on this is I'm going to go to my school.
02:23We're going to a lacrosse camp at Disney World for a week.
02:27An enrichment activity week at Disney World is three and a half days.
02:32You're paying for the week.
02:33Yep.
02:33But all in it, they got the enrichment, you know.
02:36And they do it really well, I have to say.
02:38Oh, they do it really well.
02:40I have firsthand knowledge of going to soccer tournaments over the holidays.
02:44So what does $4, $4.25 gas mean for the consumer, really?
02:49So we're right back there again?
02:50Well, it's right back there in the average.
02:52You know, the last time that I was here, we were talking about gas prices,
02:54and they have spiked again.
02:56The amount that the average consumer spends on gas is about what we suggest in our survey
03:01that consumers are going to spend.
03:02So for the consumers that are at the upper echelons and brackets, it's not as much of the percentage
03:09of the budget.
03:09But for those whose budget, you know, is only $4,000 or $5,000 a month, then that really
03:15starts to hit.
03:17And that's where you see consumers buying early.
03:20So Prime Day was earlier than it's been in the past five years.
03:22And people are buying those utilitarian products like, you know, you've got the core school
03:26supplies, but you also send stuff in that are personal care and hygiene.
03:30You know, you've got one backpack full of notebooks, but you have two sacks full of, you know, Kleenex
03:35and all those other kinds of things.
03:37Those things are putting more stress on the bottom kind of where it's a higher percentage.
03:42This is the most depressing conversation of the day.
03:44My kids are grown.
03:45Julia Wilson depressing us.
03:47She's principal for the paychecks emptying.
03:49Consumer and retail strategy, KPMG, 8.30 in the morning and in four hours, I think it's
03:55a Fed meeting.
03:55Maybe five hours, we'll call that.
03:57Futures a negative five year.
03:59And the president's comments on the attack last night in Jordan certainly weighing on
04:03the market.
04:04Brent crude over $90 a barrel.
04:06Paul Sweeney with Julia Wilson.
04:08So, Julia, the good news is, I mean, the inflation's out there.
04:13It's an issue.
04:15But the consumer's got a job.
04:17I mean, that's probably the biggest part of just, I would think, retail sales is when
04:21we look at retail sales.
04:23Yeah, it takes more than one exogenous shock to really bring the U.S. consumer down.
04:26So, you know, they're continuing to spend.
04:28There's nothing that's really taken a huge swath of the U.S. consumers and taken away the
04:33paycheck.
04:33And that's where you see the retreats that we did when we had COVID and when we have any of
04:37the other major recessions.
04:39So, they're continuing to spend.
04:40And they're spending begrudgingly.
04:42But we're seeing really strong earnings coming out from those poor consumer companies.
04:46And I think it's a result of the resilience of the consumer.
04:49What do you see in uses of charge cards or what's it called?
04:53Pay as you go?
04:53Yeah.
04:54What's the dynamic there?
04:56The KPMGCs.
04:57Yeah.
04:57So, that is, you know, when you're talking about the consumer spending more, there's
05:00places that they can cut back.
05:02And you do see that when we have one of our key graphs that I love to look at is
05:06taking
05:07everything that's, you know, essentials, you know, your house and your car and your groceries
05:12on one end and things that are really non-essential.
05:14And the things that are dipping the biggest are the large purchases, travel, the toys and
05:20electronics.
05:20All of those things are kind of low.
05:21But the middle of the pack, you know, they're still spending on apparel and footwear and
05:26some of the things that, you know, you can really, do I need it this month or do I need
05:30it next month?
05:30So, they are spending and there are some of the consumers that are dipping into savings
05:34or putting it on credit cards.
05:36So, you do see those two things slipping up.
05:38And that's where we start to say there's a little bit more softness in the consumer.
05:41It's kind of increasingly going that direction.
05:44And the consumers go into the store.
05:46They're not just clicking, right?
05:47I mean, for a while there, we thought there would be no more department stores out there.
05:51And the malls would be dead.
05:52But that's not what we're doing.
05:53No, the 90s are back in a lot of ways.
05:55So, you know, if you look at generationally, the ones that are most time-strapped are your
06:00millennials and your Gen Xs.
06:02And they're the ones that are using, and they have a little bit more, on average, they
06:07have more money to spend on higher prices.
06:09But the youngest generations, and you have to think about the Gen Alphas are really, there's
06:13a blended back to school.
06:14They're the ones that are going off to college.
06:16They're the ones that were born really late.
06:19It's really scary to say how, what years are the Gen Alphas?
06:22What year are we talking about?
06:23Yeah.
06:24Gen Alphas?
06:25Gen Alphas have things that, you know, they have their own credit card or spending money.
06:31Oh, do they?
06:32And so there's, you know, there's definitely ways that they can either have their own credit
06:36card or there's, you know, different products that, you know, a parent can control.
06:40Like it's Sephora.
06:43You know, those kids that are on the soccer field are using their spending money at Sephora.
06:50They have to hydrate their face after soccer practice.
06:53They do.
06:53Hydration is important.
06:54It's one of those areas that it goes in your body or on your skin.
06:57And sunscreen is definitely, the sun stays out longer.
07:01So those sun products are continuing to elevate our specialty beauty.
07:06Kids live in large.
07:06This is just, Julie, it's like this is the most depressing.
07:09I can see my charge card here for my son in Tokyo.
07:11I...
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