Consumer spending outlook continues to be cloudy. Last week, consumer sentiment slipped into the second-lowest read on record, while recent credit card data showed that many Americans are beginning to cut back.
Walmart, Microsoft and Subaru are just a few of the companies warning about price increases related to prices, allowing price-sensitive shoppers to pull back even more.
However, there are many companies and sectors that still see strong demand, especially as they have expanded to the steepest Chinese import taxes in recent years, especially as they have been driven by a wider market rebound following the Trump tariff suspension.
“Consumers are coming back in vengeance,” Barry Biffle, CEO of Frontier Group’s airline, said Tuesday about “Money Movers.”
At the CNBC CEO Council Summit in Arizona on Monday and Tuesday, several CEOs shared their latest views on the state of the economy, including key consumer spending areas (homebuilding, car buying, advertising, travel).
Elderly home buyers spend a lot
Home Builders and Developers Taylor MorrisonIt operates in 12 states, including Texas, Florida and North Carolina, and serves several different demographics, according to CEO Cheryl Palmer. This includes young first-time home buyers, upgrades to slightly older buyers, and groups she called “ages over 55.”
Palmer said it is the latter group representing total assets of more than $114 trillion, and the company has a great interest in its new home.
“Covid really changed this group,” she said. For these buyers, it means “I want what I want, I can afford what I want, and I don’t know what tomorrow will bring, so I want to live my full potential every day.”
Palmer said that among this type of home buyer who is very interested in house upgrades and community amenities, he doesn’t see any signs of stress in his ability to buy a home or credit profile.
But she noted that if the house is “a more discretionary purchase, it’s far more thoughtful than it makes sense.”
First-time home buyers are dealing with cost questions, Palmer said. “Can I afford? What can I buy?” she said, a concern among these buyers.
Palmer pointed to rising home prices and sticky interest rates as they contributed to a “period of instability,” but the mortgage rate this week was above 7%.
The surge in car purchases in tariff horror is over: CarvanaCEO
Consumers have been rushing to buy both new and used cars in recent months as concerns about potential tariff-driven price increases have hit the auto industry hard.
Carbana Its large recipient, recently reported 46% year-on-year sales, resulting in record quarter results. CEO and co-founder Elny Garcia said it began to become even when the CEO Council summit announced that tariffs “we had some hikes in sales, especially for new cars.” Garcia said used car pricing has also begun to fall, especially compared to the increase seen in recent years.
However, regarding the signs of an increasingly weakened consumer, Garcia said, “I don’t see any evidence of that. I feel it is very strong.”
Garcia said Calvana sells its vehicles to buyers of a wide range of age groups, and overall “consumer credit appears to be quite stable.”
“I always think I feel like the credits are getting worse, but I don’t think there’s a lot of evidence that it’s getting worse,” Garcia said.
Pinterest is looking to move to the “budget” item
After participating Pinterest In June 2022, CEO Bill Ready oversaw the push to Gen Z. GENZ currently accounts for 40% of the social media platform’s user base and is overwhelmingly appearing on the platform to seek shopping inspiration.
Ready said Pinterest is a platform for intentional choices and is beginning to see “some changes in consumer behavior.”
This is achieved by searching for “budget-related items” that are over 200% in areas such as apparel and home products.
“Consumers are becoming more thoughtful and are planning, or perhaps already beginning to experience a potential increase in costs,” he said.
The comprehensive story that emerges during the pandemic is that many shoppers have spent their products on experience, with the biggest advantage being the entertainment and travel industry.
With NFL Commissioner Roger Goodell Marriott International Speaking about the long-term partnership at CNBC CEO Council Summit, CEO Anthony Capuano said he saw the continued strength from sports fans and travel enthusiasts.
Goodell said the NFL’s recent schedule release and more than 600,000 people who travelled to Green Bay, Wisconsin, were not expected to be affected by consumer uncertainty, reflecting the NFL Draft “sports are somewhere else,” but he acknowledged some of the challenges facing the wider entertainment industry.
Capuano said Marriott, which operates in 144 countries, had a strong travel boom at the start of the year and after a slight lull in March, it returned strongly in April, despite growing concerns about consumer reliability.
The desire to travel, especially among young people, does not show that there are many indications of slowing down.
However, Capuano said he is monitoring the trends in jobs and unemployment more widely, saying that if strong job creation and relatively low unemployment continue, he “feels reasonably good about consumers.”
“The reality is this: our business thrives during a period of stability and consumer confidence,” Capuano said. “Neither of these have been receiving sufficient supply in recent months.”
For more information about the CNBC Council, visit cnbccouncils.com.
