This question is asked daily in every household and sometimes more than once per day, depending on how hu-angry the household member is who is asking.
It Seems, People Don’t Want Fries with That
You may not know the company Lamb Weston by name, but you know their product. They are the primary provider of frozen fries to McDonald’s as well as a supplier of frozen fries and potatoes to several other restaurants. In their latest public filing, they said the volume of fries shipped fell 8% due to fewer people visiting these restaurants.
This is in line with recent quarterly data from Starbucks, Olive Garden, Capital Grille, McDonald’s, Wendy’s, Burger King, Pepsi as well as other restaurant chains that are reporting less foot traffic and lower overall sales as consumers pull back their spending.
And Declining Traffic Goes Beyond Restaurants
Disneyland, Disney World, Knott’s Berry Farm, and Universal Studios have all reported lower theme park attendance. Airbnb and hotel operator Marriott reported a decline in bookings for the upcoming quarter due to weakening demand. TopGolf, which operates a combination of driving range/bar/restaurant, also reported a drop in same store sales and Pool Corp, which is a nationwide distributor of pool supplies and equipment, is estimating new pool units to be down 15-20% in 2024.
But the Employment Market Remains Strong…
The St. Louis Federal Reserve is showing the number of Californians who are employed hit a new record.
…And Not Everyone is Cutting Back
The Transportation Safety Administration (TSA) screened a record 3 million passengers in July.
Amazingly, nine of the ten busiest days over the last twenty years for the TSA were in 2024!
Uber reported a record quarterly revenue number as more people ordered rides and paid extra to have dinner delivered to them.
This last point goes back to dinner data.
Ordering food at a restaurant costs more than making it at home and ordering food for delivery costs more than going to get it yourself.
Besides Uber and airlines, many other companies and industries are finding their consumers are able and willing to buy more items, see more places, have more conveniences and experience greater luxuries.
Savers vs. Borrowers
These charts point to a rapidly expending divide between the haves and have-nots. Those who need to borrow (example: credit cards, car loans, mortgages, etc.) are facing higher costs, while those who have savings are enjoying the benefits of the highest income they have received on their balances for many years. This allows those with savings to spend more and requires those who borrow to cut back on their spending and direct an increasing share of their income to servicing their debt.
Here are Some Ideas on How to Take Advantage of the Current Economic Situation:
- Continue adding to your 401k or other retirement accounts. Keep reinvesting those dividends and interest. Some days you will buy near the top while others days will be closer to the bottom.
- Stay diversified. This is boring, but true. Having a diversified portfolio means there will always be an investment or two that you are excited about and one or two that you wish you never heard of.
- Don’t over-extend. This is not the time to drive 100 mph. It is raining and the road is slippery. Drive accordingly. Be aware of what you are paying for your debt, especially loans that adjust like credit cards and Home Equity Line of Credits (HELOCs).
- Leverage your support team. We are always here to help!
Mark Delp, CFP®, Branch Manager
Mark Delp and Wells Fargo are unaffiliated with Northshore Financial Strategies or LPL Financial.