August 19, 2022

Costco CEO Warns “A Wide range of Consumers Are in Recession Right Now”

“Consumers are getting more cautious. “

One query macro-watchers have on their minds is the state of the ALL OF US consumer amid increasing threats of recession.

The Whitened House and Federal Book offer their perspective of the healthy consumer, but that is in total  aggregate. This fails to show the entire tale of working-poor Americans struggling amid the worst pumpiing storm in forty years.  

What better way to get a new glimpse of consumer health is via  CNBC’s “ Squawk around the Street”   interview with Craig Jelinek, CEO of Costco Low cost Corporation, on Monday, that said  overall “ the consumer isn’t doing bad, ” but also mentioned,   “ a lot of people, right now, they’re in a recession because they’re just trying to survive by just purchasing gas and making home and rent payments. ”  

Sounds confusing, right? But a possibility. With some clarification, Jelinek said wealthier households still have “ discretionary income to buy products, ” which  means the lower tier of consumers is perhaps tapped out.  

What’s important is the CEO of the second-largest retailer in the world said,   “ consumers are getting more cautious. ”   It’s not necessarily an indicator that all consumption is about in order to roll over, but breaks appear in lower-tier spenders.

He pointed out that luxurious spending, such as jewelry sales, is beginning to slow, and many consumers have shifted away from buying computers and televisions.  

Jelinek’s interview sheds more light on some consumers, specifically lower-tier ones, who are tugging back on spending since their  credit cards are usually maxed out, and personal savings are drained . Though, the Biden administration, White House-aligned economists, and Given conveniently ignore the bottom tier of consumers and only concentrate on the aggregate — not allowing for the entire consumption story to be told.  

This matters because 70% of the US GDP will be driven by consumption. If not all consumers are healthy, it may be an ominous sign that will economic trouble is ahead.  

One especially troubling data point is usually the  University of Michigan Consumer Sentiment   survey hitting new lows.  

Then there’s America’s ‘ Misery Index ‘   – a broad measure of household wellbeing that will combines unemployment rates along with inflation rates – has returned to levels not seen since the stagflationary period of one-termer Jimmy Carter.  

And the jobs number last Friday was not all that great because it  showed some  people taking on multiple jobs   — a sign the customer isn’t strong.  

Optically, consumers come in decent shape if the first is to examine the aggregate, yet that doesn’t tell the whole tale as Costco’s CEO speaks about the inconvenient truth that not all consumers are healthy as some folks have  begun in order to use  micro-loans   to afford gas and groceries.  

The revolution will never be televised .

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