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Not a whole lot of people have
been impacted by interest rates, and those

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people eighty nine percent, they have
very little incentive to move and give up

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their great mortgage for a bad mortgage
now and also per Redfin, the median

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price of a starter home is forty
six percent higher than it was in twenty

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00:00:16,839 --> 00:00:22,000
nineteen. You are listening to Kerry
Letts's Financial Survival Network where you get valuable

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00:00:22,039 --> 00:00:27,559
information you just can't find anywhere else
to thrive in today's trying times. You

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need the Financial Survival Network now more
than ever. Go to Financial Survival Network

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00:00:34,000 --> 00:00:40,719
dot com and get your free newsletter
and gift. Financial Survival Network now more

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than ever. And welcome. You
are listening to watching the Financial Survival Network.

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00:00:49,200 --> 00:00:54,320
I'm your host, Kerry lets Well. Hey, consumer spending on a

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rollercoaster ride. Continuing, let's take
a look at what's going on here.

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Eddie Unit is with us now.
Eddie, always great to have you on

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the show. So what do you
make of the PC numbers that got released

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today? Yeah, you know it. I think there's a good news bad

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news thing, which is why the
roller coaster thing is. Disposable income did

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go up slightly point four percent in
May of twenty twenty three revisions, and

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that's after four months of steady declines, and so that's a good bit.

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So people have more disposable income.
However, what they're spending is still doing

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the roller coaster thing it only it
was basically flat at point one percent in

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May. Previous month was point six
month before that was point one. So

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that's kind of the macro view is
that consumers have more money to spend as

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wages have gone up, but they're
being judicious about how they spend it.

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And in particular, I see some
trends, you know. So it's just

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because consumer spending is flat doesn't mean
that it's flat for everybody. But it

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usually means is somebody's getting more money
and somebody's losing money, right, And

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so what you see is there's a
little bit of the out with the old,

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right. And so I don't know
if you saw the wait times at

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Disney World are down thirty minutes July
of twenty three versus forty one minutes a

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year ago, lois since jan twenty
two. So people aren't spending at disney

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World, which I would classify as
kind of the old, right, they

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haven't had Yeah, you know,
a Grand Slam Pixar hit or the Marvel

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franchise is kind of stalled, like
nothing really new has come out since then,

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and so there's maybe not a whole
lot of new news to go see.

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And then, Carrie, I don't
know if you saw. I wrote

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an article in the Harvard Business Review
about Netflix and there's a serial churner problem.

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And I partnered with a firm called
Antenna Buddy of mine. Jonathan Carson

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runs it, and they're a data
provider for the streaming world and subscription services.

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And what they found was that there's
a consumer type called serial churners.

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They're the anti super consumer, which
is the book that I wrote, and

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meaning that these are people who binge
and then they quit a streaming service shortly

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thereafter, right, And that percentage
of their sobs for Netflix was three percent

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in twenty nineteen and they're now sixteen
percent of their subscriptscribers in twenty two just

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in three years. I've done it
myself, you know. I want to

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see like Yellowstone or some series that
only they have. I'm willing to pay

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for a month of it whatever twelve
bucks, and then I finish it and

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I turn it off and because now
they're making it harder for families to share

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subscriptions. So they've done this to
themselves on it's you know, it's it's

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what I always have a saying,
yesterday's solutions become today's problems. Right,

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is that you make it easy to
sign up, that's fantastic. You make

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it also easy to quit. That's
going to be hard for you, And

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yeah, it's it's the right thing
to do for them. What they need

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to do is change the way they
think about content and not just you know,

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shows like Yellowstone are great. Stranger
Things was their top stream thing on

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Netflix, but like you know,
once it's done, there's no reason to

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stick around unless you get more content, or unless you get different content which

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is not binge able. And that's
kind of the premise of the article.

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But like, basically, a lot
of the what I would call out with

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the old legacy categories consumer loyalty is
declining because people are becoming more price sensitive.

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It's like, look, I got
more money, but I want to

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be mindful of isserve recession going to
happen and how do I spend it?

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But commensurate with that, out with
the old is in with the new.

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That people are willing to spend,
but on what I'm calling new and different

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experiences. And so I don't know
if you saw the Taylor Swift phenomenon,

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right, So she's going to make
about a billion dollars on her person.

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But what is even more amazing is
that everywhere she goes, hotel prices spike,

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airline affair spike, restaurant spending spikes, merch spending spikes, and so

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Cincinnat Eddie, their tourism agency,
said a Jason related spending to Taylor Swift

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for her concert went up by forty
eight million dollars per their tourism department.

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So wherever she goes spending her carson, that's a new experience, right,

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And it's not just I sit at
home at Netflix. I'm going to be

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out with other Taylor super fans and
super consumers and all of that. Bureau

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Labor Statistics is saying that the number
of US workers that are taking vacation from

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jan the June was higher than two
and a half million folks, which is

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highest since twenty seventeen. So people
are taking trips, which is good,

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and then you know you've got other
new stuff that's kind of polarizing. The

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cybertruck is. You know, people
are waiting on Data and Brown to contest

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to release this. I'm excited to
see it. Yeah, and you know

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people are either thrilled or they hate
it, right, And that's the kind

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of new and different thing that is
getting attention and what people care about.

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The same old, same old is
not getting a lot of spending. Hey,

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well, hey, can we can
do me a favor? Can we

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keep Taylor Swift out of Florida?
Because we have enough inflation and hotel prices

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are already through the roof, so
we really don't need her here the center

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to someplace like like Chicago that needs
her more than we do. Okay,

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hey, but you know, look, interest rates are still staying high,

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going higher. We just got twenty
five basis points increase on the Fed funds

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rate, which filters down into everything, and yet the economy keeps trugging along.

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Yeah, yeah, you know,
it's it's it's the same thing that

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what I think is the irony of
the higher interest rates. I don't think

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this was the intended effect. Is
that what it has caused people to do

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is hold off on big ticket purchase
items like a home and all the associated

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things that come with a new home, you know, furniture, moving,

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etcetera, etcetera. Right, and
that has actually allowed people to shift their's

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discretionary expanding to what I'm calling you
smaller, immediate and different experiences. Right,

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So permuting. What's really interesting is
that only eleven percent of homeowners have

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an adjustable rate mortgage. Yeah,
so I was actually excised by that.

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Yeah, not a whole lot of
people have been impacted by interest rates.

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And those people, the eighty nine
percent, they have very little incentive to

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move and give up their rate mortgage
for a bad mortgage now. And also,

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per Redfin, the median price of
a starter home is forty six percent

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higher than it was in twenty nineteen. So not only can you not get

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a good rate, the price of
the home is higher. So and then

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you know, all the trickle down
effects carries what you said if you don't,

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you know, really what's interesting is
first time homeowners are going to delay

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buying their starter home. And you
do that, you delay having kids,

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which is already happening with birth rates
at the extreme low, and then you're

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going to have these dual income you
know, no kid families who are renting

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that are going to have this discretionary
spending for all of these smaller immediate and

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different experiences and stuff. And so
one of the buses that I'm part of

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is Jeneo. It's a ex genematical
facial uh and to kind of have your

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your your face and your pores exfoliate
and open up like that. Business is

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on fire. I can imagine.
Yeah, fastest scrub business. And because

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of this, it's smaller, immediate
and a different experience. That's amazing.

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Huh. Yeah. Yeah. People
are definitely spending money on experiences on which

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is what Taylor Swift is about.
Traditional vacations. Disney World kind of out

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for right now. But they've gotten
so expensive at Disney World. You know,

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a family of four, it's been
ten grand in a week and on

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the hog right yeah, nuts,
it's nuts. And and then with all

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their um all of their misst epps
as far as wokeism and you know,

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societal trends, they're getting what they
deserve. Well, you know, it's

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I think it goes to show you
that we've hit the limits of what you

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can charge. Everybody's been raising price
and if you don't offer anything that's different.

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If you've been there, done that
before. I just think that there's

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not a lot of tolerance for price
increases for like, you know, charge

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me more for something I've never had
before, Okay, charge me more for

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the same thing that I've seen before
or I've been to before, you know.

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So, you know, the people
who love Disney, those Disney crazy

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super concerned they're going to keep going
and that the lower white times work out

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well for them. But it's all
the people who are like, eh,

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but look, I can leave the
country and have a better vacation than go

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to Disney and be treated better and
not stand on lines in And the heat

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too, that's one of the reasons
why people are not there. We had

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ninety five plus degree days and constant
thunderstorms every single day. Don't think that's

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00:10:05,000 --> 00:10:09,200
not impacting the traffic numbers as well. But I think I think that the

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00:10:09,919 --> 00:10:18,919
Disney or you know, maybe they
can get bud Light to sponsor them hopping

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00:10:20,200 --> 00:10:24,159
right. Yeah. The funny thing
about the bud Light thing is that that

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00:10:24,159 --> 00:10:28,639
brand has been in decline for many, many years actually, and that's lousy

138
00:10:28,679 --> 00:10:31,639
beer in my opinion. Well,
yeah, I mean that that's been the

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00:10:31,639 --> 00:10:35,320
trend has been um Light beer had
its heyday, and that bud Light largely

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grew in the back of Budweiser.
And you know now that that's all changed

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00:10:41,120 --> 00:10:43,399
and different, and that you have, you know, added on top of

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00:10:43,440 --> 00:10:48,840
that a set of executives who did
not grow up in the industry and did

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00:10:48,879 --> 00:10:52,240
not grow up. Um, you
know, the twenty years ago, the

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00:10:52,279 --> 00:10:56,639
people who marketed and led bud Light
drank bud Light. The people who run

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00:10:56,679 --> 00:11:00,480
the company now do not drink their
own beer, as my syste they probably

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00:11:00,559 --> 00:11:05,279
drink their own kool aid though.
Yeah, but hey, one thing about

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00:11:05,639 --> 00:11:09,639
housing prices and mortgage rates. You
know, I've got a you know,

148
00:11:09,720 --> 00:11:15,120
three percent mortgage where I am,
and I think, hey, maybe i'll

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00:11:15,159 --> 00:11:18,480
downsize, got a lot more room, slowing down a little bit, like

150
00:11:18,559 --> 00:11:22,480
to take some equity off the table. The only thing is, you know,

151
00:11:22,519 --> 00:11:26,320
I get a mortgage for if I
get a mortgage for half of what

152
00:11:26,399 --> 00:11:31,360
I have now, and I'm paying
the same amount in the new place,

153
00:11:31,480 --> 00:11:35,759
Granted, the taxes will be a
little bit less, the utilities will be

154
00:11:35,799 --> 00:11:39,799
a little less, maybe the HOA
fees will be less because I'll be in

155
00:11:39,799 --> 00:11:45,240
a different hoa. But you know, it's it makes absolutely no sense economic

156
00:11:45,320 --> 00:11:50,279
sense for me to even consider giving
up my mortgage. Here it turns out

157
00:11:52,320 --> 00:11:56,679
a low sub three three or lower
rate, it's like free money given if

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00:11:56,679 --> 00:12:01,039
inflation is going to be where it
is. It's basically an industry loan.

159
00:12:01,320 --> 00:12:05,159
That's an incredible asset to have,
and the mortgage may be more valuable than

160
00:12:05,200 --> 00:12:07,960
the home for a lot a lot
of people out there, and that's the

161
00:12:09,000 --> 00:12:11,279
reason why there's not going to be
a lot of moving, which will lead

162
00:12:11,320 --> 00:12:16,320
to more discretionary spending, which will
lead to more the new new wins the

163
00:12:16,399 --> 00:12:22,799
old Eddie. Think about it like
a house. Really your mortgage, and

164
00:12:22,440 --> 00:12:26,039
when things weren't so crazy, your
mortgage was a liability, a long term

165
00:12:26,080 --> 00:12:31,399
liability, and it was a good
thing because you had forced appreciation because you

166
00:12:31,440 --> 00:12:35,200
were paying down the debt. And
if you could get somebody else to chip

167
00:12:35,240 --> 00:12:39,200
in and pay the debt down with
you, you know, you could really

168
00:12:39,240 --> 00:12:43,399
build equity. Minus the times when
the real estate market flipped, people were

169
00:12:43,480 --> 00:12:48,200
underwater, but it's been relatively rare. But now, if you've got a

170
00:12:48,240 --> 00:12:54,240
low interest rate mortgage, it's an
asset and it's actually on the on the

171
00:12:54,320 --> 00:13:00,519
books of the bank. Your asset
what was an asset on the books.

172
00:13:00,639 --> 00:13:05,960
Really is now a liability, isn't
it. I mean consumers if the little

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00:13:05,000 --> 00:13:07,720
guy has finally gotten one over the
big guy, right, I mean,

174
00:13:07,759 --> 00:13:11,279
they're going to hold on to these
lower interest rate mortgages for as long as

175
00:13:11,320 --> 00:13:16,159
they possibly can, and that'll have
a major impact on the housing market.

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00:13:16,159 --> 00:13:18,799
And so like, I suspect that
will be in this kind of until the

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end of twenty five when actually coming
down, or maybe even longer if they

178
00:13:24,000 --> 00:13:28,320
calm down. If yeah, yeah, big ticket items will continue to be

179
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delayed, and again all the ramifications
like this is not good for population growth

180
00:13:31,879 --> 00:13:35,679
because you know, you need these
larger homes or starter homes for people to

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00:13:35,759 --> 00:13:39,919
want to have kids and raise their
families that way. And we need kids,

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00:13:39,240 --> 00:13:43,399
but the population to grow because otherwise
we end up like Japan or Western

183
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Europe where the population is shrinking and
you know all the negative stuff that comes

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with it. So I anticipate deflation
to happen on the old old stuff that

185
00:13:54,159 --> 00:13:56,919
people have realized that they hard for
that, and you know, inflation to

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00:13:58,000 --> 00:14:01,360
continue on new stuff that is exciting. And it'll be a tale of two

187
00:14:01,360 --> 00:14:07,600
cities. Hey, And like in
Florida, here, real estate prices have

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00:14:07,679 --> 00:14:11,759
gone up five percent over the past
year in the face of mortgage rates doubling.

189
00:14:13,080 --> 00:14:16,440
Partly it's due to a lot of
cash buyers here, more than in

190
00:14:16,480 --> 00:14:20,440
most places. I think forty percent
cash buyers. But it's also people would

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00:14:20,519 --> 00:14:28,879
rather pay higher rates than stay in
failing cities and states and the migration here.

192
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You know, like I said,
we don't need tell or Swift.

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00:14:31,000 --> 00:14:35,519
We got plenty going on without her, and maybe that's the lesson here.

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00:14:37,600 --> 00:14:41,600
Yeah, absolutely, all right,
Eddie, tell us where do we find

195
00:14:41,600 --> 00:14:45,320
you these days? Yeah, you
can find me. Actually, we have

196
00:14:45,360 --> 00:14:48,080
a new book out, the twenty
two Laws of Category Design. You can

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00:14:48,120 --> 00:14:50,840
go get it on Amazon and if
you sign up and you know mentioned,

198
00:14:52,000 --> 00:14:54,919
or if you get the book and
you know, find your way to me

199
00:14:54,000 --> 00:14:58,879
on Twitter at Eddie would Grow and
mentioned you heard about this on your show,

200
00:15:00,039 --> 00:15:05,039
Kerry, then there's a free Companion
AI workbook that will absolutely give it

201
00:15:05,080 --> 00:15:09,200
to you complimentary as a get to
the show. So at the book,

202
00:15:09,240 --> 00:15:15,000
ping me on Twitter or my email
Eddie at eddiwood Grow dot com and I

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00:15:15,000 --> 00:15:18,559
will get you the AI Companion.
It's great. Like the book, Kerry,

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you don't read the book the book
reads you. If you do the

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AI worksheet, and the workbook,
you know teach you all the things you

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need to know to how to design
a category of your own or create your

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own category personally. All right,
we love it, so you can be

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00:15:31,159 --> 00:15:39,159
found. We'll have all those links
social media and as well as your email

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00:15:39,200 --> 00:15:43,799
address and your website on Financial Survival
Network dot com in the show notes.

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00:15:43,840 --> 00:15:46,600
You can click any of them and
just go right to it. While you're

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00:15:46,639 --> 00:15:50,600
there, sign up for your free
newsletter. If you've got a question for

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00:15:50,720 --> 00:15:54,600
Eddie or myself, you can also
send me an email k l at Kerry

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00:15:54,639 --> 00:15:58,519
Lutz dot com. Eddie love having
you on, Have a great weekend and

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00:15:58,759 --> 00:16:02,600
we'll talk to you again soon.
Thanks Carry, Thanks for listening to Carry

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00:16:02,679 --> 00:16:07,840
Lenz's Financial Survival Network, your solution
to today's trying times. For the latest,

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00:16:07,919 --> 00:16:15,559
go to Financial Survival Network dot com. Financial Survival Network now more than ever,