Nobody is BUYING ANYTHING...HERE'S WHY

We just got some new inflation and consumer spending data this week that I think is going to be interesting to go over because it's going to show the current state of the economy. And none of it's really going to be a huge surprise, but I don't want anybody to be surprised because if you're surprised, where have you been? We got an inflation report that shows that excluding volatile food and energy, core inflation is up 2.8% year over year right now. And in January, the core inflation figure was 2.7%. So it inched up just a little bit to 2.8, but the thing you want to pay attention to here is this number of core inflation, 2.8% excludes food and energy, which is obviously two of the major categories that people need to spend a lot of their money on. And here's something funny. Take a listen to this. Economists watch core prices because they are typically a better guide of where inflation is headed. Well, yeah, it's headed up. This is 2.7 the prior month, and now it's 2.8. So it's headed up. So yeah, it's a perfect gauge of where inflation is headed. And then if you throw the volatile food and energy back in there, the number is probably actually much worse than that, and it's well over 3%. So I think we might actually be able to kiss goodbye this whole idea that we're going to see 2% inflation again, maybe ever. I don't know if they're ever going to get it down to that amount, but if they do, it's going to be nothing short of a miracle with the way things are right now. And then they talk about consumer spending. Consumer spending supposedly, keep that word in mind, supposedly rebounded in February. Because in January, we actually had the worst month of consumer spending in four years. So here's the numbers. Here's what happened. Consumer spending in February went up 0.4% up from January, not 0.4% year over year, just up 0.4% from the prior month. However, listen to this. The 0.4% gain was actually only 0.1% gain after adjusting for prices. Meaning that when we look at how much prices have gone up by just the official numbers, that spending essentially stayed flat. So basically all of this supposed additional spending that happened in February was due to price increases and inflation. And what these numbers tell us is that the economy has essentially stopped growing, guys. We are not seeing any growth. And in fact, I wouldn't be surprised if very soon we start seeing these numbers go negative because of how much people are out of money and how much of the spending has been relying on debt over the past couple of years. So we're in a situation right now where spending is going down because inflation is too high. It's looking very unlikely that the Fed is going to cut interest rates at all for the rest of the year in 2025. I mean, how could they? They just got this core inflation reading going up, guys. And this is what they like to look at. And it's going up. So what kind of justification can they use to actually cut interest rates right now? There isn't one. And according to the spending report, most of the increase in spending was on things like cars and appliances. And spending actually fell in categories like restaurants and hotels. And I know people write me all the time here on the channel saying, well, listen, it's busy where I live. I see a lot of people out eating at the restaurants where I'm at. I see the parking lot full at Walmart or whatever. Just because that's like that in one small area of the country doesn't mean it's like that everywhere, guys. You have to understand that even during the Great Recession, the worst recession any of us have seen in our lifetime, we still had pockets of the country that were thriving. It was still easy to get a job in some places. There were still people out spending money in some places. That doesn't mean it was like that everywhere. And they're saying that part of the reason these appliance and car sales actually probably went up is because of the anticipation of tariffs. Car prices are set to rise pretty substantially for foreign imports starting on April 2nd if they follow through with the tariffs and they don't get revoked like many of the other ones we've seen so far. But if that happens, the tariffs on those are going up by 25%, guys. How much is that going to increase car prices? By a lot. Does it really matter? Not really, because most people can't even afford a brand new car right now anyways. Now, some economists are celebrating this report because they said incomes rose 0.8% in February from January. They're saying that the higher income combined with lower spending actually pushed up the savings rate and they said that can fuel future spending. So that's something that we need to look out for and see if that actually happens. I think what it really means is people are being careful and people are trying to make as much extra money as they can while saving as much extra money as they can because people are basically hunkering down for the storm. I think that's what's going on. This is a good sign that people are kind of doing the things we've been talking about here on the channel. Like, let's make a little extra money. Let's save some of that extra money for a rainy day. That's a good thing. There's nothing bad about that. Some people argue, well, the bad thing is people are not out spending money and then we're seeing these consumer spending numbers go down and businesses suffer from it. Yeah, true. But everybody needs to look out for their own wallet right now. You can't be worried about your local economy and if local businesses are doing okay if you can't even pay your own bills. Here we have a house that supposedly sold for $2,200 back in 2021. Actually, no. I'm sure it actually sold for $2.2 million. This is how it looks on the MLS when real estate agents input the wrong numbers by mistake. Well, it sold for $2.2 million, we can assume back then. Now, fast forward to today, this house is listed for $5.25 million. Somehow, over the past four years, this house has magically doubled in price. Does anybody actually believe that? Does anybody actually buy? That's the story here because I definitely don't. Now, one thing we haven't talked about in a while is layoffs. QVC, the channel that sells all of these items, they sell all kinds of things on there, pasta makers and vacuum cleaners or whatever else they sell on there. I don't even know if anybody still buys stuff off of QVC, but apparently they probably don't because they are laying off about 900 people right now. Apparently, their company has about 17,000 employees globally, so they're laying off about 5% of their workforce right now. One thing that QVC says they're trying to do is make a shift to social selling in addition to their broadcast selling business. Most likely, they're making this shift because that's where the money's at. They're probably making more money on social media selling on there now than the traditional let's everybody watch this channel and call in and buy something. Those days are over, guys. Honestly, I'm surprised a company like this is even still in existence right now. Another business that has fallen on hard times recently, big time, is Family Dollar. In fact, Dollar Tree is a different dollar store that owns Family Dollar, and they sold Family Dollar for $1 billion, okay? But back in 2015, they paid $8.5 billion for the Family Dollar chain. Think about how big of a loss that is because that was 10 years ago, way before we had this run up in inflation that we have seen. Let's just say inflation's up 50% over the past five years, which I think most people can agree with. Not only are they taking a substantial loss on the actual nominal value that they're selling Family Dollar for, but they're actually losing an additional 50% on top of that due to inflation because that $1.5 billion is easily worth 50% less or even less than that than it was 10 years ago, guys. Probably more like 70% less. They're basically giving away Family Dollar for free at this point. A big investment firm called Brigade Capital Management and McCallum Capital Management are the purchasers of Family Dollar, and it's yet to be seen if they're going to keep the same brand name or if they're going to rename it something else or what's going to happen with that. Now, on the surface, you might be wondering, why did one survive and one actually do so poorly? Well, actually, it turns out that Family Dollar and Dollar Tree serve different customers in different locations, which is something I didn't know. For example, Dollar Trees are mostly in suburban locations and cater to middle-income households seeking party supplies, crafts, or other knickknacks, and they usually sold items at around a dollar. Nowadays, obviously, those prices have gone up substantially. Family Dollar, on the other hand, are more concentrated in urban areas and sell groceries, cleaning products, and other essentials at various price points. So those differences might provide some insight into why Family Dollar is suffering and Dollar Tree is still doing better. Mainly, it seems like it revolves around the income of the customers that they serve. And the brand was already suffering tremendously before Dollar Tree ended up selling Family Dollar because in 2024, guys, let's not forget. They closed down 1,000 locations due to inflation, due to theft, due to these problems that these sort of stores are having. And some people might say, well, look, they just bought the business. They didn't just decide to go out of business. Well, yeah, but let's not forget they closed 1,000 stores in 2024. And how many people actually lost their job due to all of those stores closing back then? And speaking of job losses in the workplace, things like that, one of my viewers wrote me this story of something that's happening to her that I think is interesting that I want to bring up here. And she said what's happening is she works for a large IT company in the Boston area. And her company has a policy that says you have to live within a one-hour commute of the job. Well, the problem is in the Boston area, rent is extremely expensive. And she just got hit with another rent increase for her lease renewal. And she says that while she can afford the increase, it's definitely not ideal. And it's pushing her very close to what her maximum comfortable limit for rent would be. And it puts her in a weird position because she says if she can go 20 plus miles away from Boston, then she can get much lower prices on rent. But then it puts her outside of the range of being within that 60-minute commute. And my first response and first thought was, well, why don't you just ask your boss for a raise then, since it's because of their policy that you're not able to actually move to a more affordable place. You would like to, but you're not allowed to. And she told me that their company does not give cost of living increases when it comes to wages. But her son actually works for Amazon, and they did give him a cost of living increase. So it's pretty unfair how some companies treat their employees versus others here. And it puts people in a very strange position, right? Like if you're already kind of up against the wall and your budget has reached pretty close to the maximum of what you're willing to pay, what happens next year if it goes above what you're willing to pay or able to pay and you need to stay within range of your work? You quit your job. Now you're in a position where you don't have a job and you can't afford your rent. That's even worse. But I'm sure a lot of people out there have faced this dilemma. So if you have, go ahead and put in the comments how you dealt with it and what ended up actually happening for you, because it's a tricky problem to solve. You know, you don't want to quit your good job in order to move somewhere cheaper, especially if you're not able to find a better job somewhere else. Now, one thing that we talked about several weeks back was all of the student loan borrowers that are past due on making their payments and how much their credit scores are being hit by this. And it's estimated about 9.7 million student loan borrowers right now are past due on their bills after the repayments started to come back online. And that's probably projected to just get worse as people just don't have the money. People have gotten used to spending money on other things and now they don't have it in the budget to make their student loan payments. In fact, the relief period has been over for a while. Since September of 2024, people who have student loan payments are supposed to be paying them now. But by the end of the off-ramp period, the New York Fed estimates that the volume of past due federal student loans hit 15.6% with more than $250 billion in delinquent debt, guys. They're saying that according to these numbers, it's reasonable to expect student loan delinquency to surpass pre-pandemic levels when new delinquencies start hitting the credit reports. If you take a look at this chart right here, this is a chart of the shadow delinquency rate, meaning that this is about what they think it is right now. And this goes all the way back to 2017. And you can see that it was actually around 14% back then, but went down tremendously during the pandemic, which is not a huge surprise since no one really had to pay. But then started skyrocketing back up in 2024. And now in 2025, it is at or even beyond where it was before the pandemic. So when we look at the credit reports of student loan borrowers who are 90 days or more past due, this table right here shows you the estimates of how far people's credit scores are dropping because of this. And actually, the higher your credit score is from the outset of missing those payments, the more your score actually falls. If you start from the bottom of this chart, look at this, guys. If you have a 760 or higher score, your average credit score is declining by 171 points right now by missing payments. It's declining by 165 points if you're between a 720 and 759. Also declining by 165 points if you're between a 660 and a 719. And as you can see, the list goes on. But at the top, if you already have a less than 620, it's pretty much only declining by 87 points, which is roughly half of the hit that people at the top of the credit chart are seeing. And this shows you a couple of things. First of all, how important it is to pay all of your bills, regardless of what type of bill it is. Student loan, mortgage debt, car loan, credit card, whatever. If you don't pay, you're going to see a big hit on your credit. The second thing this shows us is how many people are strapped for cash. They can't pay or they're refusing to pay. And with these dropping credit scores, these people are going to face a significant decrease in the ability to borrow or spend money into the future economy, which is going to hurt things even more than they're hurting right now. I mean, think about it. We just went over consumer spending at the beginning of this video. It's essentially flat as inflation ticks up. Simultaneously, you have a lot of people, almost 10 million people, at least, that are seeing their credit scores drop significantly, which means they're not going to have as much available credit to them. Even if they wanted to go buy that new car, they wanted to buy that house, or maybe even just charge 500 bucks on the Macy's credit card, that might not be available to them, which all means even less consumer spending into the future. And the result of all of this for people who are missing the payments are reduced credit limits, higher interest rates for new loans, and overall lower credit access. So that means less borrowing and purchasing power for you. So I just want people to think about that because you can say, well, I don't care, Michael. I don't have student loan debt. None of my kids are in student loan debt or whatever. Doesn't matter. What matters is how it's going to impact the economy at large. And I don't know about you guys, but I just find all of this extremely fascinating. The direction that things are going in right now, like it just continues to slowly deteriorate, right? The state of affairs, the way the economy is going. Every week we get some sort of bad news about how things are going, but yet still most of us are doing okay, at least on the surface, it seems like. And listen, ultimately, I want Americans to succeed. I want people who watch this channel to do well financially. And that's why I bring all this stuff up in hopes that people hear this and say, hey, I don't want that to be me. I would rather be the guy that has the money saved for the house now that prices are coming down. I want to be the guy that has access to credit when I want or need something that I've been thinking about for a while, not somebody who's trying to constantly make up the difference and falling behind. 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