Consumer Strength: “The Consumer Is Not Strong, Savings Are Depleted"

Greg Weldon, CEO of Weldononline.com, joined Benzinga's Premarket Prep team to discuss consumer strength in the market.

Transcript

00:00where we are now from where we were at August 5th, it's been an incredible comeback here.

00:05Is this all just on the hopes of the rate cuts and that's why the stock market's perking up here?

00:10Possibly. I think it's a bigger picture than that because you say, well, the consumer is so strong.

00:14Consumer is not strong. Retail sales have been flat at best relative to the price increases.

00:20You have months, and we talked about this the last time I was on the show,

00:23where the one month you had $27 billion in price increases across the board and all the

00:28things that people bought and a $25 billion increase in retail sales. It was all prices.

00:33So retail sales are flat to down on a real basis. The consumer is struggling mightily. You talk

00:39about they just borrowed $25 billion, one of the biggest months ever outside the pandemic

00:45in single months, right? And at the highest cost ever to do so, so high that the Fed in their

00:51consumer credit report has stopped reporting the average interest rate on credit cards. Out of the

00:55blue for the last two months, you don't have any data, not available, right? So in that context,

01:00you say, well, that shows the consumer's strong, right? No, not at all. Why? Savings are depleted.

01:05You went from $5.71 trillion in savings to $598 billion in the last report. That's the lowest

01:13outside of right around the pandemic since 2013. So savings is gone. You have no real wage gains,

01:19so you're not there. You have consumers that are borrowing money and working multiple jobs

01:23out of economic need just to pay the bills. And if you see that in the stock market, why?

01:29Because the consumer ETFs have gotten slaughtered, not only nominally, but more importantly, against

01:35the S&P 500. So this has been a stock market rally that is because it benefits companies.

01:41AI is going to be a margin improvement dynamic for sure. I would say it's an economic destroyer

01:46in terms of jobs. It's not going to be the internet where you create as many issues. No way.