Consumer Confidence, Holiday Spending, and Market Trends
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Summary
In this episode of our podcast, Jason Ranallo and Kara Murphy discuss the current state of the markets and consumer behavior, particularly in the context of the holiday spending season. They explore the complexities of consumer confidence, the impact of inflation on spending habits, and the performance of the stock market, including the potential for a Santa rally. Kara shares insights on the health of consumer balance sheets, the labor market, and the overall economic outlook for the coming year.
Who is Kara Murphy?
Kara Murphy is the Chief Investment Officer of Kestra Investment Management, where she and her team collaborate with Bluespring/Kestra partner firms, including Vector Wealth Management. Kara is a regular contributor on CNBC and Bloomberg TV. She is also active in financial publications, including The Wall Street Journal, The New York Times, and Barron’s.
Takeaways from the conversation
· The labor market is healthy with low unemployment.
· Consumer confidence is relatively low, in part due to the impacts of inflation.
· Holiday sales are expected to be up about 3%.
· Earnings growth among large companies is strong.
· Santa rallies (strong year-end market performance) have been less reliable in recent years.
Save the Date – January 14th at 3 pm (CST)
Kara will be joining us again for a market and economic outlook livestream. We will follow up with additional details for this event. Stay tuned.
Chapters
00:00 - Introduction to Kara Murphy
03:11 - Current Trends in Consumer Behavior
06:33 - Understanding Consumer Confidence
08:12 - The Impact of Inflation on Spending
09:32 - Market Trends and Santa Rallies
11:34 – Regulatory
Charts and Graphics
Transcript:
(adapted for readability)
Welcome to the Well Balanced podcast, brought to you by Vector Wealth Management. Today, we’ll dive into markets, the economy, and, specifically, consumer behavior and retail spending—key topics as we enter the holiday shopping season. Joining me is Kara Murphy, Chief Investment Officer of Kestra, Investment Management for an insightful discussion.
BlueSpring, along with parent company Kestra Financial, is the firm Vector Wealth Management has been affiliated with for around five years. One of the reasons we partnered with BlueSpring was to gain access to resources like Kara and her team at Kestra Investment Management. Kara, it’s great to have you here.
Kara has an impressive background as a keynote speaker at industry conferences and a regular contributor to television and radio programs, including CNBC, Bloomberg TV, and Bloomberg Radio. She’s also frequently quoted in major publications like The Wall Street Journal, The New York Times, and Barron’s. Recently, she was named Chief Investment Officer of the Year at the Women in Finance Awards. Congratulations, Kara!
Kara shared a bit about her journey into the financial world. Growing up as the daughter of two English teachers, finances weren’t a common topic at the dinner table. She learned the hard way about financial consequences during college, struggling to make ends meet. Later, while working on Wall Street, she developed a love for financial literacy and markets. Kara found her passion in connecting the intellectual side of market analysis with helping people achieve significant personal financial goals, such as funding college educations or planning for retirement.
Shifting to today’s topic, we explored consumer behavior during the holiday season. According to Kara, the current picture of the consumer is complex. On aggregate, consumer balance sheets are healthy, with relatively low levels of debt compared to periods like the global financial crisis. The labor market is another strong point. Unemployment is low, wages have been rising, and the job market remains robust by historical standards. However, these strengths are juxtaposed with low consumer confidence. Despite stable jobs and balance sheets, many consumers feel pessimistic—a sentiment reminiscent of the financial crisis era, though confidence is even lower today by some measures.
Spending habits offer further insight. Holiday sales are projected to grow about 3% this year, roughly flat after accounting for inflation. While consumers may be trading down to less expensive products, overall spending indicates they still feel relatively positive. Inflation remains a persistent concern despite slowing growth rates. Prices for staples like groceries are still significantly higher than pre-2019 levels, contributing to widespread discontent across demographics.
We also touched on the stock market’s recent strength. Since August, markets have surged roughly 19%, defying typical election-year patterns and fueling conversations about a possible Santa Claus rally. Kara noted that while the rally isn’t guaranteed, factors like robust earnings growth and the possibility of smaller companies benefiting from lower interest rates suggest continued market health heading into 2025.
Kara, thank you for sharing your insights. This has been a fascinating discussion. We’re also excited to announce that you’ll be joining us again in mid-January for a live webinar on market and economic outlooks. We’ll dive deeper into these topics and more. Stay tuned for details, and visit our website, vectorwealth.com, to subscribe to our market perspective newsletter. Thanks again for joining us, and happy holidays!
These discussions aim to spark dialogue about enhancing retirement readiness and making more informed financial decisions. At Vector, we delve into the nuances of scenario planning, offer insights and guidance tailored to each client's unique circumstances. If you or someone you know is pondering their financial future or seeking clarity on their retirement plan, we're here to help.
This discussion is with Vector’s Jason Ranallo and Kara Murphy.
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