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The proposed Kroger/Albertsons merger that has been in the works for over 2 years may finally be coming to a resolution soon. Fast Company’s Anna-Louise Jackson takes a look at what’s at stake and how the FTC and shareholders are assessing the impact. Read More >>
Video of the Month: With the rise of fast casual restaurants like Chipotle and Cava over the last decade plus, many people wrote full-service casual dining restaurants as a relic of the 90s. However, one iconic chain has bucked that trend. After closing over 100 locations in the last 10 years, people are starting to return to Chili’s and that has driven a 14% same store sales increase. Check out how they’ve done it in this video from CNBC >>
While our top story this month shows that this year’s Halloween season may fall short of 2023’s record breaking total of $12.2 billion, we’ve also started to see the beginning of Holiday sales projections as well. Deloitte has weighed in with a slower, but still growing, prediction of 2.3%-3.3% increase over last year’s total of about $1.55 trillion.
Deloitte’s reasoning stems from concerns about rising credit card debt, high interest rates, and the lingering impact of inflation; along with a Bankrate survey that found nearly 1/3rd of respondents saying they will be cutting back on Holiday spending this year. However, despite the headwinds that have been present from inflation and credit card debt for over the last 2 years, consumer spending has been robust. So, why the pessimism for 2024?
While it's true that inflation has landed near the Fed’s preferred target of 2% over the summer, the compounded impact of the post-pandemic spike in prices means that while things may not be getting more expensive as fast these days, goods still cost over 10% more than where they were at the beginning of 2021. Of course, this was largely true last year as well but we are also seeing a slowing job market which caused the Fed to lower interest rates by a half point. This is likely weighing on consumer psychology more than price sensitivity heading into the Holidays, while the impact of the rate cut may not be felt by average consumers until early in 2025.
Still, there is a bull case to be made as well. Not only are gas prices lower than they’ve been in years, the monthly numbers from the back-to-school season surprised on the upside overall, with August sales up 4.3%. Key categories driving the sales spike included a strong rebound for electronics and apparel sales, while home furnishings came in higher than expected posting a small gain, the first increase in the category since 2022.
There is no doubt that American consumers have proven themselves to be nothing if not resilient through the choppy economic waters, but with the Fed’s soft landing largely achieved this year’s Holiday season will be a stress test to find out if things have been stretched too thin.
Mike Jordan
Listen to the Song of the MonthLegendary guitarist David Gilmour of Pink Floyd returned this month with his first album of new material since 2015 titled Luck and Strange. There are few other artists who could still sound so vital while nearing their 80th birthday. Gilmour’s guitar work remains as soulful as ever on this plaintive collection that takes stock of a life well lived without resting on one’s laurels. The new album is also a family affair, with his daughter Romany taking lead vocals & plucking the harp on a cover of an obscure 1999 song by the Montgolfier Brothers. Far from indulgent, Romany Gilmour’s pensive voice is a highlight of an album that rates as one of the best late career missives from a music icon. Listen to “Between Two Points” here >>
