Latest / Financial Survival Network / Interest Rate Roller Coaster Keeps Going -- Eddie Yoon #5864

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Interest Rate Roller Coaster Keeps Going -- Eddie Yoon #5864 · Financial Survival Network

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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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  nineteen. You are listening to Kerry Letts's Financial Survival Network where you get valuable
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  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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  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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  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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  not impacting the traffic numbers as well. But I think I think that the
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  Disney or you know, maybe they can get bud Light to sponsor them hopping
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  right. Yeah. The funny thing about the bud Light thing is that that
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  brand has been in decline for many, many years actually, and that's lousy
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  beer in my opinion. Well, yeah, I mean that that's been the
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  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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  and different, and that you have, you know, added on top of
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  that a set of executives who did not grow up in the industry and did
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  not grow up. Um, you know, the twenty years ago, the
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  people who marketed and led bud Light drank bud Light. The people who run
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  the company now do not drink their own beer, as my syste they probably
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  drink their own kool aid though. Yeah, but hey, one thing about
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  housing prices and mortgage rates. You know, I've got a you know,
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  three percent mortgage where I am, and I think, hey, maybe i'll
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  downsize, got a lot more room, slowing down a little bit, like
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  to take some equity off the table. The only thing is, you know,
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  I get a mortgage for if I get a mortgage for half of what
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  I have now, and I'm paying the same amount in the new place,
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  Granted, the taxes will be a little bit less, the utilities will be
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  a little less, maybe the HOA fees will be less because I'll be in
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  a different hoa. But you know, it's it makes absolutely no sense economic
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  sense for me to even consider giving up my mortgage. Here it turns out
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  a low sub three three or lower rate, it's like free money given if
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  inflation is going to be where it is. It's basically an industry loan.
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  That's an incredible asset to have, and the mortgage may be more valuable than
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  the home for a lot a lot of people out there, and that's the
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  reason why there's not going to be a lot of moving, which will lead
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  to more discretionary spending, which will lead to more the new new wins the
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  old Eddie. Think about it like a house. Really your mortgage, and
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  when things weren't so crazy, your mortgage was a liability, a long term
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  liability, and it was a good thing because you had forced appreciation because you
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  were paying down the debt. And if you could get somebody else to chip
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  in and pay the debt down with you, you know, you could really
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  build equity. Minus the times when the real estate market flipped, people were
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  underwater, but it's been relatively rare. But now, if you've got a
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  low interest rate mortgage, it's an asset and it's actually on the on the
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  books of the bank. Your asset what was an asset on the books.
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  Really is now a liability, isn't it. I mean consumers if the little
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  guy has finally gotten one over the big guy, right, I mean,
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  they're going to hold on to these lower interest rate mortgages for as long as
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  they possibly can, and that'll have a major impact on the housing market.
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  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
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  calm down. If yeah, yeah, big ticket items will continue to be
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  delayed, and again all the ramifications like this is not good for population growth
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  because you know, you need these larger homes or starter homes for people to
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  want to have kids and raise their families that way. And we need kids,
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  but the population to grow because otherwise we end up like Japan or Western
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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
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  people have realized that they hard for that, and you know, inflation to
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  continue on new stuff that is exciting. And it'll be a tale of two
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  cities. Hey, And like in Florida, here, real estate prices have
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  gone up five percent over the past year in the face of mortgage rates doubling.
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  Partly it's due to a lot of cash buyers here, more than in
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  most places. I think forty percent cash buyers. But it's also people would
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  rather pay higher rates than stay in failing cities and states and the migration here.
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  You know, like I said, we don't need tell or Swift.
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  We got plenty going on without her, and maybe that's the lesson here.
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  Yeah, absolutely, all right, Eddie, tell us where do we find
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  you these days? Yeah, you can find me. Actually, we have
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  a new book out, the twenty two Laws of Category Design. You can
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  go get it on Amazon and if you sign up and you know mentioned,
• 14:52
  or if you get the book and you know, find your way to me
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  on Twitter at Eddie would Grow and mentioned you heard about this on your show,
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  Kerry, then there's a free Companion AI workbook that will absolutely give it
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  to you complimentary as a get to the show. So at the book,
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  ping me on Twitter or my email Eddie at eddiwood Grow dot com and I
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  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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  found. We'll have all those links social media and as well as your email
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  address and your website on Financial Survival Network dot com in the show notes.
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  You can click any of them and just go right to it. While you're
• 15:46
  there, sign up for your free newsletter. If you've got a question for
• 15:50
  Eddie or myself, you can also send me an email k l at Kerry
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  Lutz dot com. Eddie love having you on, Have a great weekend and
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  we'll talk to you again soon. Thanks Carry, Thanks for listening to Carry
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  Lenz's Financial Survival Network, your solution to today's trying times. For the latest,
• 16:07
  go to Financial Survival Network dot com. Financial Survival Network now more than ever,