'Barbie,' consumer spending, jobs, retail shrink: What we learned this week

It was a busy week for investors, with earnings and jobs data dominating the headlines. Here some of Yahoo Finance Live's top takeaways.

Lower income households are feeling recessionary, as recent earnings reports from retailers like Walmart (WMT), Target (TGT), Home Depot (HD), and Lowe’s (LOW) show a cautious consumer, as they pull back on big-ticket spending and shift to spending on services versus goods. Yahoo Finance’s Brad Smith notes "consumers are continuing to be extremely judicious" about where they’re purchasing items.

The July JOLTS report showed that the number of job openings slipped to 8.8 million in July, which fell short of the expected 9.5 million.

Companies such as Dollar General (DG), Five Below (FIVE), and Nordstrom (JWN), all said they are feeling the impact of shrink hitting their bottom lines.

Barbie, Beyoncé’s ‘Renaissance World Tour,’ and Taylor Swift ‘Eras Tour’ have had quite the impact on the economy, as they benefit from the consumer shift in spending on services over goods.

Video Transcript

RACHELLE AKUFFO: Well, speaking of things being busy, a busy week for corporate earnings and economic data. As we enter the first trading day of September, let's recap some of the biggest lessons that we learned this week.

First up, lower income households are feeling recessionary. I mean, we're seeing people really pulling back more than ever. We heard in the earnings calls. We know that people are really bracing for what we're seeing with student loan repayments set to start back up. And so I think every little seed that's being planted, is saying, look the consumer has run out of that pandemic money, they're trading down or trading off some of these more expensive things.

And then when you factor in, when you look at those big gas prices on top of everything else, it's just-- it's a very tough time for the consumer right now. And it's starting to show up in some of the price action.

BRAD SMITH: One of the acknowledgments from BlackRock, the lower income parts of the economy are certainly feeling a little bit more of the pressure, especially considering the extent to which inflation has needed to be combated to this point. And particularly, BlackRock's Rick Rieder who had said off the back of Fed Chair Jay Powell's commentary even-- and Jackson Hole recently saying that the higher rates right now is an overly regressive tax on lower income households and consequently expands the income and wealth gap in the country here.

And if there's anything that you've looked across, many of the details that have come forward over the course of this retail earnings season is that consumers are continuing to be extremely judicious about where they're purchasing big ticket appliances, where they're purchasing televisions even, or even the types of clothes or apparel that they are buying. And so that particularly is of note and could spell out a little bit more of how consumers across income levels are thinking about their spends, even amid this shift to services spending as well, which we'll get to in a hot second.

But one of the other things that we've tracked over this most recent month here, the number of job openings, that slipped. And we saw this show up in the most recent JOLTS reading. We got that at the tail end of August. And perhaps something for the Fed to pay attention to here is that it's now taking us to, I believe, the lowest level of openings since mid-2021 here. So that particularly, and I think, it was, to be exact, July of 2021 and thereabouts.

And so ultimately, as we think about where more of those jobs are still continuing to need to be added on, it is in a lot of the more labor intensive parts of the economy, and that showed up in today's employment situation as well, Rachelle.

RACHELLE AKUFFO: It's true. And I mean, I remember at the beginning of the year, we talked about some of these layoffs that we were seeing in tech. That's still continuing to happen. I mean, we spoke Andy Challenger of Challenger, Gray, & Christmas earlier this week. And he said, so far this year, employers announced plans to cut 481,900 jobs. That's a 203% jump, compared to the first seven months of last year.

So we're still continuing to see this cutting of jobs. We also talked about this quiet cutting, where we're also seeing people getting reassigned into other jobs as well. And that's not necessarily showing up in the jobs data, but showing some of the minimizing that we're seeing. And as we were just talking about with our guest here, a lot of these companies doing well. But it's because of some of these cost-cutting measures that are showing up in some of these job cuts, Brad.

BRAD SMITH: Spot on.

RACHELLE AKUFFO: And then, of course, I also want to shift gears because we're also seeing shrinkflation hitting Brick & Mortar retailers. I mean, we heard from retailers reporting, all this week and last week as well shrink, whether that's from mostly that we're seeing from theft or from damage, continuing to bite that bottom line there, Brad.

BRAD SMITH: I mean-- and it's across retailers. You've got it at the high end, you've got it at mid, and then also at the lower side. You heard this from Dollar General. You also heard this from Target who many of us have perhaps had some type of shopping experience at, where you walk up to even just get some body wash. You're just trying to stay clean and hygienic at home. And you still got to wait for somebody to walk over after you wave your hand, wand your hand in front of a sensor for them to come open it up for you. That's a change in experience and the customer experience there.

And then even at the top end and for Nordstrom, what we saw in the more viral video, they acknowledged that on their earnings call. And so it's really across the spectrum that shrink is impacting many of these retailers as it was brought up on all of these conference calls in one form or another and changing the way that they think about their inventory management, especially in store as well.

But even as we're thinking about those shopping for goods out there, the shift has really been into services, Rachelle. Of course, Beyonce, Taylor Swift, Greta Gerwig's movie, "Barbie," they are benefiting amid a consumer spending shift. And I don't know if you got dressed up to go see "Barbie" movie like I did, Rachelle. But I know you actually did go see Beyonce, so you're part of that shift.

RACHELLE AKUFFO: I contributed to both the "Barbie" economy and the Beyonce economy. I already own a lot of pink. But yes, even when I knew the "Barbie" movie was coming out, I made sure I had my lovely, giant, pink Telfar bag. I was all the way ready. And so it's really a decision that we're seeing that people are being very discerning about what they're spending on. They might not spend as much on other things, but they are prioritizing certain things.

I was not about to give up Beyonce tickets. I was like, I'd never seen her perform. It's one of those things where it's that revenge spending. It's like, look, if I'm going to spend on something, it better be something that's worth it.

BRAD SMITH: Look, I agree with you. They almost got me. I almost bought some tickets to see Beyonce in Houston because where else to see the Queen Bee than her hometown? So I don't know. But I almost was part of both the travel spending economy and then, additionally, the concert and just making sure that you're enjoying the experience part of the economy as well. So I almost got got. But ultimately, it probably would have been a great time too. It hasn't happened yet. So maybe I can go get it at some point. I don't know. It's too expensive for me.