As inflation continues to weigh on household budgets, consumers are making tough choices about where to spend their money. Jeffery Roach, Chief Economist, LPL Financial joined TheStreet to discuss how consumer spending habits are changing.
Full Video Transcript Below:
CONWAY GITTENS: So as an economist, as you look at the broad spectrum of spenders are with extra savings dwindling, especially, as you said, on the low income scale, do you see where consumers are starting to choose to cut back and tweak their spending??
JEFFERY ROACH: Well, we’ve seen a pullback in some of those big ticket items, you know, so furniture, for example. So you also have, you know, cars now. Now car sales have stayed pretty elevated. But we know from the amount of incentives that really dealers are starting to see a little more pressure on the consumer and really to entice them to come on the lot. They have to put a little more of those incentives. So the incentive as a percentage of average transaction price is increased a little bit. I think those are some of the leading indicators where you’re starting to see the beginnings of a slowdown. Again, this is not a massive type of recessionary type slowdown, but a slowdown nonetheless.
CONWAY GITTENS: And do you see any areas, especially in terms of luxuries where people, despite the falling savings rate, still want to spend their money on?
JEFFERY ROACH: Well, we still see some pretty strong demand for travel. You look at the throughput data that the TSA puts out. So you can track the number of folks that are going through security stations throughout the country. And travel has certainly been very, very strong. We continue to break new and new records on the amount of travel. And so it seems as if, you know, that component is remaining pretty solid. And of course, we’re peak travel season right now. So it’s important to compare apples to apples here. So you compare at this stage of the summer time relative to previous years, demand for travel is still strong. That’s certainly going to be good news for restaurants for those in the accommodation sector, the hotels, et cetera.
