Christine Short, Head of Research, TMX Group gives a closer look at the spending slowdown reshaping the outlook for retailers, markets, and the broader economy.
00:00 — Consumer Trends
00:38 — Spending & Debt
01:27 — Consumer Sentiment
03:00 — Economic Uncertainty
04:42 — Holiday Outlook
06:29 — Retail Winners
Transcript:
Caroline Woods
Joining me now, Christine Short, Head of Research at TMX Group. Christine, thanks so much for being here.
Christine Short
Thank you for having me.
Caroline Woods
So we’re talking retail is of course, heard from a lot of the big names in the retail space in terms of earnings. We have Black Friday this week. Tell us what’s the single biggest takeaway about the consumer that we know right now.
Christine Short
You know it’s not new. We’ve been hearing about this for a little while. But from a lot of the earnings reports that we’ve heard recently, it’s about this bifurcated consumer that retailers are still seeing strength with higher income consumers. But on the lower end they’re continuing to see that squeeze. And overall, I think across all income brackets, consumers are really looking for a bargain. They’re looking for value. That’s why you’re seeing you know some of the discounters like Walmart still perform well, although they even saw it said they saw some moderation from the lower income cohort and then the off price retailers. So TJX companies, Ross stores, anyone that’s, you know, giving a perceived value something worth more. But you’re getting a bargain for it. That’s what customers are looking for.
Caroline Woods
So customers continue to be price conscious, but they’re still spending?
Christine Short
They are still spending. Whether or not that’s a good thing, if you look at the latest New York, I fed reserve Bank, quarterly report on household debt and credit. Credit card debt balances have gone up about 5.8% in the third quarter versus the year ago. So it just shows that to fund some of these purchases, consumers are relying a little more on debt for their daily, you know, everyday expenses.
Caroline Woods
So how concerned are you about the consumer based on what we’ve heard from retailers, but also based on statistics like that?
Christine Short
Yeah, it’s funny. I kind of look at everything in three buckets. I look at what the companies are saying, I look at what the data, the economic data is saying, and then I look at what consumers are saying, because some of these surveys, like the University of Michigan Consumer Sentiment Survey, reported their lowest reading in or their second lowest reading in the eight years that they’ve conducted this survey. But it doesn’t always mesh with how consumers are spending, but it does show the concern they’re preparing themselves for what might come. Right. Between the government shutdown the longest in history, we’re still unsure of tariff impacts or what’s going to happen with trade policy. Some of these jobs we’ve been seeing some pretty big layoffs. We still don’t have up to date jobs report. So I think overall consumers are feeling kind of this, this tense, anxious feeling about what to expect in 2026. But then I’ll look at other surveys, like the National Retail Federation survey on holiday spending, and most people surveyed are spending. I think they had, over the holidays, $890 this holiday season versus last season, which was a record of $900. So we’re just about $10 below the spending of last year. Some of that can be, you know, inflation, but also it just shows consumers are still spending. And families, in fact, are expected to spend $33 more in this year versus last year. Whether they’re they’re putting that on credit cards, we’ll see in the next fed report. But so those those two surveys are kind of telling a different story right? There is the anxiety out there. But they still want to make this holiday season great. They’re willing to spend for it.
Caroline Woods
Is there anything in any of the data, though, that indicates a recession could be on the horizon, or the economy could be severely contracting?
Christine Short
I don’t think there’s anything right now that’s pointing to that. We are still seen quite a resilient consumer, but I know there’s been chatter about recession. There’s been a chatter of a correction in the stock market. You know, a couple of big bank CEOs talking about that at recent investor conferences. And so I think that all impacts, how consumers are feeling about their ability to spend and keep a job going forward. And so you’re seeing some of that reflected in the surveys. But there is not one data point I can say right now, yes, for sure, this is heading in this way or that way. It’s still all at the end of the day, pretty good data. But we’re continuing to see this slowing.
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