401(k) investing, food price inflation, holiday shopping: Wealth!

On today's episode of Wealth!, Host Brad Smith breaks down key personal finance stories, from anticipated interest rate cuts to a lookahead to the holiday shopping.

Traders have been pricing in a 25-basis-point interest rate cut from the Federal Reserve at its September meeting next week. Crescent Grove Advisors co-chief investment officer Andrew Krei notes that the labor market has been increasingly in focus since July's jobs report saw the unemployment rate hit 4.3%, sparking fears of a recession. However, he believes that the labor market data shows the economy "softening off of an ultra-hot level" rather than indicating the beginnings of a recession.

According to new data from Fidelity, there are now almost half a million 401(k) plan participants with balances of at least $1 million in their accounts. UBS financial advisor Tracy Byrnes encourages retirement savers to not "set it and forget it," and explains the importance of revisiting a retirement account to rebalance and diversify. She warns, "What was good when you started working 20 years ago might not still work today."

The latest Conference Board Consumer Confidence Survey shows Americans are still under pressure from high prices, as necessities like food are straining budgets and wallets. Former USDA economist and Cal Poly professor of agribusiness Richard Volpe explains that in 2021 and 2022, "we saw food prices increase at a clip that we hadn't seen in the US since the 1970s." He notes that while inflation has cooled across the board, food prices have not fallen.

As the holidays are right around the corner, retail sales are likely to increase between 2.3% and 3.3% from 2023, according to Deloitte's annual holiday retail forecast. Deloitte Consulting retail and consumer products leader Michael Jeschke believes that retailers with omnichannel approaches will likely outperform this holiday season, expecting a 7% to 9% acceleration as they "are best able to meet consumers where they are."

This post was written by Melanie Riehl

Video Transcript

Welcome to wealth everyone.

I'm Brad Smith and this is Yahoo.

Finances guide to building your financial footprint.

Our community of experts will give you the resources, tools, tips and tricks that you need to grow your money.

And on today's show zooming in on your investment portfolio, we'll talk about how to broaden out your portfolio beyond technology and how to become a 401k millionaire.

We'll talk to a financial advisor about best moves that you can make to maximize your retirement savings.

Plus searching for a new job.

We've got you covered with our weekly career tip segment.

Today is all about building your network out relationships and navigating A I in your search as well.

But first before all of that, let's take a look at some of the market action.

90 minutes into today's trading activity stocks little change this morning after a fresh read on inflation, wholesale prices, they came in a bit hotter than expected last month, month, over month, but showed growth moderating significantly on an annual basis.

Traders are increasingly pricing in a 25 basis point rate cut from the fed next week.

So let's talk about how all of this is going to affect your investments here with more.

We've got Andrew Cry who is the uh co co chief Investment Officer over at Crescent Grove Advisors here.

Andrew, thanks so much for taking the time here with us this morning.

So as all of us are staring down these next few trading sessions, all eyes are in focus for this fed FO MC meeting and so for the meeting that is anticipated to yield a 25 basis point rate cut, how might that impact people's portfolios?

Sure.

Yeah, I think if we look at where we've come from in terms of the narrative and how this is played out ahead of this fed meeting, I think it's sort of important to keep that in mind this big shift towards the labor market data, right, as opposed to the inflation data.

In fact, this week, sort of the, the lack of fanfare around CP I, the lack of fanfare today around uh PP I is telling that there's been such a focus on the labor market and what that then portends in terms of the, the trajectory for the economy.

If we're seeing unemployment tick up, you know, ultimately, is that a signal that the economy is weakening, that we're headed towards a recession, that the FED needs to act more quickly.

You know, I think that was sort of top of mind for investors.

And as you evaluate the, again the outlook for corporate earnings, but for us if we kind of take the mosaic of, of data that we've seen, whether it is looking, you know, purely at the labor market, which we think is just more softening off of an ultra hot level.

But then you look at corporate earnings, what we saw last quarter in terms of earnings growth.

Um you know, still very solid.

Uh from that perspective, if you look at credit markets, which are usually an early indicator of stress.

Um broadly speaking in, in financial markets, pretty, you know, quiescent all things considered.

You know, we just sort of take the totality of information and think that perhaps uh this la last little bit of volatility that we've seen over the last several weeks here is a bit unwarranted given again, you know, everything that's going on we think is a pretty favorable backdrop um going forward for, for markets.

Yeah, it was interesting because the markets were trying to see whether or not or at least game out whether or not they should have been paying closer attention to CP I, we, we did see an early morning dip off of the print yesterday, but then we saw markets rally back after that and ultimately uh regain some control of the, the emotion that seemed like it was in the tape.

And so all of these things considered, where are the strongest sectors that people should be positioned for or positioned in when the rate cutting cycle does begin.

And when we ultimately get some type of sense on what the terminal rate will look like.

Sure.

So we think we would kind of frame it in terms of tech versus everything else in this environment, right?

And you know, this kind of goes back to blocking and tackling portfolio management in some respects where you've seen these tech names, these mega cap growth names in particular, the mag seven do so well over the last 1218 plus months in particular and, and warranted in the sense that their earnings growth was far superior to the rest of the market.

But as you look out now over the next 2 to 4 quarters in particular, you look at the sort of broadening of earnings growth this trajectory now for the S and P 493 if you will kind of the the rest of the market to catch up and in particular, some sectors like healthcare, like financial, industrial, some things that would be more traditionally thought of as kind of value type sectors.

You know, the forward looking earnings growth expectations, there are starting to look a lot more favorable and you're starting to converge with these tech names, which we think presents an opportunity uh alongside it, you've got a much less demanding valuation backdrop for those sectors, right?

So I think you point to that and you say, ok, you know, some of the exuberance and enthusiasm if people are rotating out of those tech names, take some chips off the table.

Where do you go, you look at these types of sectors that, that I just highlighted.

We also just got an ECB rate cut for the second time here uh in just about three months essentially.

And so with that considered, uh I bring that up because there are also investment opportunities outside of the us that you've been looking towards as well.

Where are those more pronounced opportunities that you would be telling investors to, to really consider for their portfolio?

Sure.

And, and a lot of that comes back to again, us versus non US is effectively a tech versus everything else type of bet in many respects.

And what you see is historically, you know, non us stocks, they kind of follow, follow the cyclical type pattern every 18 to 24 months.

You see business cycle dynamics play out and right now, we're sort of at a trough or coming off of a trough, let's say, with manufacturing activity, export activity, global trade.

So if you start to look at some of those early indications of, if the trade cycle is gonna inflect higher, it's starting to look reasonably positive.

So to your point, we would look at areas like Europe, which hasn't had the most flattering data prints recently, but they do have the ECB providing some support in terms of lower rates.

And then you are seeing some, you know, sort of inflection points again looking uh like an improving economy or sort of dynamic around exports and the cyclical portions of the economy uh playing out.

And you look at Japan and you look at things like emerging markets, Xin, we sort of set China to the side but all these different dynamics point to us uh in a direction.

And that say that cyclical picture is playing out and you've got much less demanding valuations are gonna come back to this theme because you've got these mega cap tech names which trade at uh you know, pretty rich valuations in this environment.

You know, is there an opportunity to make that relative value, rotational trade right now in advance of this uh sort of inflection point playing out.

Andrew, who is the co Chief Investment Officer at Crescent Grove Advisors, Andrew.

Thanks so much for taking the time here with us today.

Thanks for having me.

Certainly coming up, everyone plan on being a millionaire by the time you hit retirements.

That's the big question.

I sure do.

We've got some tips to help make that happen next so we can all get to that marker and all later on in the show.

Hey, watch me make some jelly.

I got the chance to spend some time with the CEO of JM Smucker as part of our lead this way series.

You do not want to miss it.

There are more 401k millionaires than ever before.

According to new data from Fidelity, there are now roughly 497,000 401k plan participants with balances of at least $1 million in their accounts.

So how can you set yourself up to be on the path to be a 401k millionaire yourself here with more?

We've got some of those tips.

Tracy Burns, who's the U BS financial advisor?

Joining us here, Tracy, great to see you again.

So I think first and foremost, people just wanna know.

Ok. Am, am I part of that number?

And if not, how do I become part of it?

What are some of the first steps that people can take to set themselves up to be a millionaire by the time they're ready to tap in that 401k?

Yeah, Brad.

It's all about consistency.

You know, it's much like when you die at Monday through Friday and then on the weekend you have pizza and potato chips and you wonder why you're not losing weight.

It's the same thing, slow and steady, wins the race and I bet you those 497,000 people put money in, left it there, put it in the stock market, checked on it and let it grow.

And I think that's really important too.

Don't just like set it and forget it.

Make sure you revisit, you diversify, you rebalance if you have to.

What was good when you started working 20 years ago may not still work today, Brad.

So you have to get back to it.

As well and pay attention.

And so with that in mind, what are some of the common mistakes that you see people making Tracy?

So that's it.

Right.

We forget all about it.

We don't increase that.

I'll tell you the number one of the number one things people could do is when you get a raise, give your retirement plan a raise as well.

Bump it, just a little bump it in accordance, set it, set the percentages as a matter of fact to increase with your salary.

If you can.

I would also say that one of the worst things and the hardest things is that people make withdrawals before retirement and you can, right.

It's your money.

Try really hard not to, you can for first time home buyer, you can for hardship if it's possible not to touch that, leave it alone.

And lastly, don't forget that match.

If your company is offering you money, you better give to, you get it because it's free money and it's yours and it will add to that million down the road someday.

What's, what's a good investment rule of thumb for contributions to that 401k as well?

Here, it's really hard to say, right?

If you live in Manhattan and you're first, you're, you're just out of college.

It's so hard to say, oh, by the way, you should put the max in because you can't make rent.

So I get it.

I say you just try really hard to pay yourself first, but I am cognizant of the fact that living expenses are tough in certain places.

But ideally, you want to hit that annual number every year because don't forget you don't pay tax on it until you retire.

So it is a help paycheck to paycheck to not have to pay tax on a portion of your salary.

All right, Tracy burns who is the U BS financial advisor?

Joining us here on Wealth, Tracy.

Great to see you.

Thanks so much for the time and insights.

You too, Brad, thanks.

Thanks.

Well, ask anyone applying for jobs right now and they will all tell you the same thing you spend time crafting your resume and the perfect cover letter only to have an A I tool disregard potentially your application and the hiring manager never even sees that you applied.

And according to a new report from work day, 77% of organizations plan to increase use of an A I tool in hiring in the upcoming year.

So how can you gain an advantage over the competition in this new landscape?

Well, here to help, we've got I Ana Goldstein who is the founder of Ileana Goldstein coaching.

Great to have you here with us in studio.

So first and foremost, I mean, why are so many employers and potential employers tapping into A I tools to really help them weed out and perhaps qualify certain applicants too?

Well as I'm sure you discuss a lot on this show.

We're obviously in a time in the job market where from a job seeker's perspective, there is just not a lot of availability out there, but there are quite a lot of people.

So it's a bit of a supply and demand issue, which means that when jobs are getting posted, there are so many people applying for those jobs.

And as a recruiter, it's virtually impossible to be able to go through all of those.

So A I is obviously very helpful, helpful from an efficiency standpoint, from being able to really weed out people who are just not a fit and will help just in streamlining the process for them overall.

From that perspective, how do I make sure that I'm not a weed that that gets tossed out of the pile when I'm trying to throw my head to the ring for this position, that could be a dream job, could be a pivot but know that A I is gonna be looking for certain things in that application.

Yeah.

So I mean, the irony here is that in order to avoid being tossed out by A I, you need to be using A I herself.

So very simple things like taking the job description, throwing it in a chat GP T to pull out the relevant keywords to ask it to highlight what are the top 3 to 4 skills that I should really be emphasizing in my resume right.

All those kinds of things are going to help using it to help prep for interviews for phone screens there.

So many different tools that A I can use it can also just help you be more streamlined again and be more efficient, whether it's the types of emails that you're sending from a networking perspective, helping you do that and and just build those efficiencies into your job search.

So leveraging it as your own tool will be very helpful.

There's a lot of people trying to build out their network as well right now.

And this is incredibly important just to identify opportunities that might not even be posted J or know where the murmurs are about where teams are looking to expand.

How can people start to make sure that their network is set up for their pivot that they wanna make or just for that next gig that they're looking to do?

Yeah.

And, and the funny thing too is we talk about A I and we can use it, you know, until the cows come home.

But in the end, it's not gonna be anywhere near as helpful as having that established network, right?

That's the number one tool.

So when we think about really developing that network, uh number one, think about the low hanging fruit, right?

People that you're already connected with, but don't stop there, which is where most people stop.

It's about facilitating and developing a new new network.

So using tools like linkedin to identify people in the roles and not the companies that you want for yourself.

Of course, uh Just being ok, putting yourself out there this morning.

I was in a mom group that I'm in, I saw that one of the moms posted, hey, my husband is trying to get a job at Spotify.

Is any, do you know anybody here?

Right.

So you have to be willing to put yourself out there and potentially be rejected, right?

You're not always going to be met with a response, but that the best way to cultivate that network.

And then even when you are actively employed, making sure that you're still doing that, right?

The best thing to do is to put yourself in a position where you have all these connections.

So that when you are thinking, yeah, I want a new job, you're not starting from scratch, but you're tapping into all the people that you have really been maintaining while actively working.

So all those things are going to be very helpful.

Yeah, great tip and shout out to that mom uh for making sure that she's tapping into her network as well.

And uh we gotta do the and husbands out there.

I should say y'all gotta do the same.

All right.

So all these things considered prepping for a pivot, a lot of people trying to figure out.

All right, if my job right now could be at risk of not having as much of the requirements as it does because there's a new technology or it's just a changing environment or maybe I'm just interested in something new.

How can people prep for their pivot as well?

So I think the one of the biggest mistakes people make when prepping for a pivot is that they kind of start going and taking action before they even know what they want to do.

And if you are pivoting, you have to be able to really brand and market yourself for that and be able to highlight, highlight those transferable skills.

And one of the best ways to do that is to first niche down on what it is that you want to do.

So I really encourage people to think about, where have I been the most engaged in my career and in my role thus far and within those areas, what are the skill sets that I'm using?

And then where can I take these skill sets and transfer them elsewhere?

And once you can really nail on that specific title that you were looking to pivot into, then we lean into all the networking strategies that we lean into A I to really customize our resume in our linkedin and we can go from there.

But you got to get clear on what you want and not spread yourself across a lot of roles, focus really seriously on one specific role.

Just lastly while we have you here, uh I'm looking at my inbox, say, and I have a meeting request.

Ok.

Finally, I've gotten that opportunity to speak with either a recruiter or hiring manager.

How can I stand out in the interview?

Uh So this is a big one that people overlook as well.

Your elevator pitch.

It's one of the first things you will be asked.

Tell me a little bit about yourself.

Everyone glosses over it or goes on a five minute tangent and you completely lose your interviewer.

At that point.

You have to really prep that I recommend at most 2, 2.5 minutes of speaking at that point, break it into sections, you know, overall overview of who you are.

What are your uh notable accomplishments, things like that.

Why are you excited about that role?

So ace that intro and then also close it with really good questions that other people aren't asking.

Those are two really good ways to start and close the interview.

Eliana Goldstein, who is the go Eliana Goldstein coaching founder joining us here on set.

Thanks so much for taking the time.

Of course.

Thank you for having me.

Certainly guys coming up.

How expensive are your groceries?

Really?

I talked to a former USDA economist about this.

Next on wealth, high prices, essentially, especially on food have been a source of concern for consumers since the pandemic ended.

Now in the latest CP I print we saw food prices moderating with groceries unchanged.

On a monthly basis and up just 9/10 of a percent year over year, still shoppers are feeling the pinch in the latest conference board Consumer Confidence survey.

They mention of prices and inflation topping right in responses.

So why is there such a disconnect between prices and how consumers feel?

Joining me now with more is Richard Volpe.

He is a former USDA economist and professor of agribusiness at California Polytech State University.

Great to have you here with us.

Uh You have been looking across the consumer realm and, and really trying to get a sense of the mindset right now where to your estimation and, and from what you've been able to analyze is food inflation sitting at right now in this broader cycle, food price inflation is down.

So we saw in 2021 and in 2022 we saw food prices increase at a clip that we haven't seen in the US since the 19 seventies.

And understandably, that's been challenging for a lot of households, especially lower income, more price sensitive households.

But, but that rate of inflation has slowed.

Uh in many cases, it's actually flat line, you know, for many food categories.

However, food prices, nominal food prices have not come down.

And you, you mentioned sort of in your lead up, you mentioned that disconnect and I think that's the number one source, I think uh we see these headlines and they say food inflation cools CP I inflation cools.

That's good news for consumers and then consumers hope or expect that translation to seeing food prices coming down.

But that would, that would really be sort of counter to the norm in the US and in most developed economies to see actual nominal deflation.

And that I think is the number one source of sort of that confusion disconnect and lingering frustration among many.

Where within the the perhaps basket mix, would you expect prices to continue to decelerate or even decline and quicker than, and relative to other parts of the basket?

Sure.

Yeah, we're seeing, we're, it's actually easier to talk about the places where we're still seeing challenges.

But in terms of inflation, we're seeing a lot of relief uh with uh fruits and vegetables and with a lot of uh central aisle foods, a lot of bakery goods, uh breads and cereals.

Uh There are still several uh you know, uh protein sources where we are seeing relief.

Uh But that said some of the biggest challenges uh which are, which are prominent in the minds of many consumers.

We're seeing food price inflation remaining strong for um for beef products, for pork products, uh for eggs.

And we're still seeing some challenges with those, the fats and oils, the butters and the margarines and the oil based foods there.

Um So those remain outliers and those are the areas, the few areas in this market where we do still see inflation even stronger than that historical average.

You, you mentioned that food prices have been more volatile in the last 15 years.

Why, why is that?

And how do consumers navigate that reality?

Yeah.

There, there are a lot of reasons for that.

It's, it's really interesting and, uh, you know, food price behavior since aro around the turn of the century, around 2000, there really was a sort of a sea change in the way food prices behaved if you compare sort of the late eighties into the nineties.

And then right around 2001, 2002, a lot of reasons for that.

Um But I like to point at a few specific factors, I like to point at a major increase in the sort of volatility and inflation of upstream energy costs.

So we've seen crude oil for a number of reasons behave in a way that's far more erratic since around that time.

And of course, energy prices that the whole food supply chain, not just retail, not just what consumers can see, but the whole food supply chain is very, very energy dependent and energy intensive.

Uh We've seen a number of challenges arise with respect to labor in the last say, generation, labor availability turnover, people moving into jobs in other sectors.

Uh We've seen some persistent up upstream commodity challenges going on.

And then more recently say since uh you know, in the last 1015 years, we've seen refrigerated truck transportation in the US become a major challenge.

We've had, we've been dealing with driver shortages.

We've been seeing truck rates increasing, especially in the long haul.

We've seen uncertainty in the availability of carrying capacity and refrigerated transport and that has also been a fact that has been driving volatility, especially in the last 1015 years or so.

You know, it's, it's interesting.

Uh and I'm looking at a Deloitte survey that came out with some data that saying when it comes to deciding between either fresh or convenient food ease, often wins.

And that ease can also mean some impacts or at least trade downs uh to some of the store brands or retail brands as well.

How do you expect that mix to essentially play through and into the mind of the consumer when they're going through grocery aisles?

Yeah, that's a fantastic question.

And the way I would sort of first I guess respond to that is, is I actually think we've seen the retail sector, especially since COVID, I think we've seen grocery stores all across the US ranging from single store operators up to some of the biggest players, the the national chains um responding to sort of that increased demand on the part of consumers.

So, you know, COVID-19 obviously changed the game with respect to where people buy their food and the food and how they prepare food and, and, and all those and who they're eating with.

And grocery stores have responded across the board by increasing the availability of, you know, when we think ease a lot of people think.

Oh, well, center aisle, you know, a box that I can open or something I can just add water to.

But I think especially in this modern economy in these last few years, we've also seen this sort of experiential demand increase and we've seen a huge increase in the availability and proliferation of ready to eat, ready to eat pre prepared prepared foods, ethnic foods, the sushi, the soups, the fried chicken and consumers have a strong demand for these foods.

But it's worth pointing out when consumers purchase these foods, they're outsourcing labor, right?

They're outsourcing the inputs and the labor required to make those foods, these foods tend to be higher cost and higher margin.

And it's not exactly I think what you asked, but I do want to point out that the availability and demand for those foods.

It's a major reason why we're seeing relatively strong profitability among a lot of retailers because they perceive this demand and they're meeting it and consumers are increasingly shifting even their sort of convenience, experiential budget.

Um In some cases away from the supermarket, I'm away from the restaurant and towards the supermarket.

Interesting.

We got to have you back to continue this conversation.

You're going to be a really important uh point that we continue to hear about even leading up into the election, uh which we didn't get to, but we'd love to have you back, Richard Volpe, who is the professor of agribusiness at California Polytech State University.

And maybe we'll just come out there.

It seems like it might be better weather anyway.

We appreciate it.

Thank you very much.

Thank you.

Let's move it here.

Steering the wheel, so to speak to the auto space.

Yahoo Finance behind the wheel, took the 2024 Cadillac Lyric EV for spin bra Superman and Rick Newman are here now to tell us about their test drive.

I love you guys ride along as well.

The way I'm gonna come once uh look, just throw me in the back seat.

All of these cars that you're driving have back seats and I get no invite but tell me about this and the Cadillac Lyric, what were some of the takeaways here?

So I'll start with the design?

So I thought, I thought that when I first saw it, um it was pretty impressive.

I mean, I, I've seen a lot of these cars right now as, as, as Ubers and, and high end kind of livery.

Uh and it's actually kind of bigger than you think it's more striking than you think.

Um It's very adult.

It's not, maybe, maybe not see my, my style Rick, but I thought it looked quite nice on the, on the outset as well as the inside which you get a chance to, to take a look at too.

Yeah.

So I, so I'm gonna bust you here.

Pros.

Uh, I mean, so the first, first thing pros told me about this car, you see, it looks like a taxi or an Uber.

And I was like, what?

So you get the best Ubers in town, I guess?

Right.

I don't know.

I was like, I think it looks distinctive and, um, i, it's not, doesn't mean that I would necessarily want to buy it, but I love cars that look different and it's really hard to make a car that looks different.

I mean, there are some out there, you know, Rivian is got that interesting headlight alignment.

The new Ford Bronco looks pretty cool, but it's very hard to make a car that looks different before we get into the good stuff.

I want to point out some bad stuff here, Rick.

You are actually fumbling right now.

You're really struggling and you had a problem with that.

Right?

Uh It, it's just overcome.

There's so much going on in cars these days, especially luxury cars where they just have to cram in every possible thing so that we have one clip where you counted all the, I think you counted 15 buttons just on the steering wheel alone.

Those are the shortcut buttons and I, I had trouble, uh, pushing there are different types of cruise control, regular cruise control, smart contr, cruise control.

I thought I had one, I had actually pressed the other, the car didn't slow.

Now, there's too much going on.

If you own this car, you're gonna figure it out and you're gonna sort of get the settings customized to your liking.

But, um, there's a lot.

So we, we drove the car, we, we drove the car actually.

Yeah.

Yeah.

And we actually liked it, I think top three for me, obviously, good design, good interior space, but it drove well smoothly.

Even the rear wheel drive car with one motor in the back, I thought had good power.

I think it's a winning package, good execution.

I mean, it Cadillac is, is building good cars these days.

I mean, people might think this is kind of a tarnished brand.

It's building good cars, but I also feel like this is a test bed and we this is a little bit geeky, but this is the first time they use this so called Altium.

They're trying to brand their battery pack.

It's the altium battery pack and they're gonna be a lot more vehicles coming with this altium.

So this is sort of the first big launch with that.

We're gonna see more of this.

And so this pricing like it is because I think I saw this at the US Open which typically you see car manufacturers go to an event like that, like big sponsor, right?

To try and make sure that they're drumming up that luxury demand as well.

I mean, is this luxury pricing or is it fair pricing uh for a luxury vehicle.

So real quick, uh it starts at $59,000.

59 ours was around 7070 something with kind of the, the goodies demands the best Rick we're looking into real quick.

The leasing is where it's at for this car massive deals for leasing because there's a lot of them out there and they get that tax credit for it.

That's right.

And so you're gonna see more Cadillacs.

And so I think what's going on here is the electric ones all end with a Q.

So this is the lyric ends in a queue.

I've got the op I call it the optique but you tell me it's the optic.

What's the other one?

The V stick and then way down and then there's a Supercar stick that's, they all end in Q, it's way out.

Ok. Pros and Rick Newman.

Thanks so much.

Uh I'll be waiting for my invite.

I mean, I sit right behind you pros.

So, uh, hopefully I'll get that next invite for the, uh, for the Celestic or whatever we're calling them with the cues.

Now, thanks so much.

Appreciate it.

Much more on wealth after the break.

You're watching Yahoo, finance, the holidays are right around the corner and many Americans are looking to spend Deloitte's annual holiday.

Retail forecast shows retail sales are likely to increase 2.3 to 3.3% compared to last year joining us.

Now, is Deloitte, consulting's retail and consumer products leader Michael Jeske.

Michael.

Great to have you here with us on.

Well, first and foremost, I mean, you think about some of the anticipations going into this holiday season.

How does this also kind of mirror up against what we've been tracking, which is AAA really battle tested consumer as prices have certainly come into play on both staples and some of the discretionary items.

Yeah.

Well, good morning and, and thank you for having me on.

I, I think you summarized it pretty well that it does line up against some of the battle tested consumer.

What we're forecasting is a more normal return to growth and a moderated return to growth as opposed to what you've seen over the last few years.

So when we look at our economic forecast, we're looking at, you mentioned the 2.3 to 3.3% growth.

That's very much in line with what we've seen historically over the last 10 to 15 years and that's where we think we're going to be returning to.

So, so is that normalization?

Are we just getting back into normal holiday seasons?

Yeah, we are seeing more of a normal holiday season trend and, and you're seeing a variety of uh macroeconomic factors that are influencing that, but all net out to what you've seen historically pre pandemic.

And so with that in mind where some of the strongest categories that you're anticipating could potentially outperform.

Well, some of the strongest categories are, are the traditional ones you're gonna see.

Uh, those, uh particularly on the retail side, those that have invested in the omni channel and, and those that have built up uh capabilities to service customers through a variety of different channels.

Those are the retailers that are gonna exceed and, and the categories that they have are gonna be the ones that continue to exceed as well.

And, and on the other end considering that this is the biggest slowing that we may have seen since what 20 18, what does that kind of hold for some of the categories that may underperform and, and how much there's gonna be needing to uh be a sense of promotions or, or discounting that some of the retailers are gonna need to put forward to move through that inventory.

Yeah, that's a question.

I get quite a, quite a bit.

Uh There's gonna be a fair amount of the discounting and, and it really relates to what's been happening with prices over the last few years, you know, inflation has been up and it, and it has driven prices up, uh it's come down.

So inflation then turns into both a headwind and a tailwind for us.

Um On the fact that it's come down, it gives more uh availability to spend.

And so you can continue to uh be able to um the consumer is going to be able to continue to buy on the other side of it, the prices have have driven up.

So some of the categories that get into more discretionary spend are gonna still be tougher, tougher spends that all relates to a lot of promotional environment.

A lot of uh seeking value and convenience and retailers really chasing that demand for the year.

It seems like for retailers as well, it's going to become uh even more of a, a focus to make sure that their omni channel approach uh is clicking on all cylinders and I bring that up as we're, you know, flashing on the bottom of the screen here.

Um or we were a moment ago, some of the digital sales and online sales expectations there.

How much of that are you expecting to really kind of offset some of the the deceleration and growth in the in store side?

Yeah, II I think that dynamic is spot on.

Uh if you look at deeper underneath the forecast, it was 2.3 to 3.3% total growth within that the the online channels are gonna continue to accelerate at a faster pace.

We're forecasting a 7 to 9% for uh acceleration there.

And so to the heart of your question, those that have invested into their omni channel capabilities, those that have really uh met the consumer of where they are and meet that ecommerce acceleration.

Those are the ones that are gonna win for the upcoming year and then as we have you as well here.

You know, I'm thinking about the consumer propensity to, to look for those promotions as we were talking about, but also not just looking for promotions, but the amount of debt that they're willing to take on.

Especially knowing that we've seen the New York fed already look into how consumers are spending, realizing that we've now hit a marker of more than a trillion dollars in credit card debt.

So what could we essentially see this get to after the holiday season if people are saying, you know what I'll, I'll still spend, but I'm just gonna put it on credit instead and figure out how to pay it down later.

Yeah, I think that's why we're seeing this come back towards a normal spending period because of the facts that you just mentioned credit card debt is high savings rates are, are lower.

Those are going to be some of the headwinds that are going to prevent us from getting to that uh strong growth that we've seen in years in years past now, how consumers choose to pay down the debt afterward.

Uh That's gonna be individual by consumer and we'll be talking more with consumers in our October uh follow up survey where we talk directly to shoppers of how they plan to spend in what categories and where they'll be going.

Uh Michael, we got 30 seconds left or less.

Um Any tips for consumers out there shopping this holiday season.

Yeah.

So tips are uh some of the standard ones shop early for deals, visit the sto stores.

Take advantage of all the investments that have been made in both the omni channel, the online and the physical retail uh loyalty.

The loyalty programs are gonna continue to increase.

So take advantage of those and then you're seeing the continued advent of free shipping and, and really meeting consumers where they are.

So continue to use that to your advantage, Michael Jessy, who is the Deloitte consulting retail and consumer products leader.

Thanks so much for taking the time with us today.

All right.

Thank you for having me.

Absolutely.

Coming up, I spent the day with JM Smucker, Ceo, Mark Smucker as part of our lead this way series and I made my own jelly.

We'll bring you that piece on the other side of the break.