Christine Short, Head of Research at Wall Street Horizon, spoke with Quartz for the latest installment of our “Smart Investing” video series.
Watch the interview above and check out the transcript below. The transcript of this conversation has been lightly edited for length and clarity.
ANDY MILLS (AM): Looking ahead to Q4, are you seeing any weakness anywhere in the economy?
CHRISTINE SHORT (CS): Yeah, it’s funny, it’s a really mixed picture right now. Both on the labor front, the consumer front. We’re waiting to hear from the Fed. I mean it sounds like we’re getting a cut, right? I don’t think anyone’s expecting no cut, but is it 25 basis points? Is it 50 basis points? There’s a lot of uncertainty right now. We track this proprietary metric called the late earnings report index, and it shows that right now CEOs are feeling a little bit uncertain. It’s not necessarily a bearish metric, but it just shows they’re not quite sure about their prospects for short term growth. You do have those rate cuts that are gonna come into play. You have a US presidential election that’s gonna come into play. We’re still positive and feeling bullish around a soft landing, but we’re not quite there yet. If you ask about certain economic indicators, labor has flip-flopped every other month. Last month we came in at 142 non-farm payrolls, the expectation was 160. Okay, so we’re down a little, but unemployment ticked down from 4.3 to 4.2. Wage growth was up. So there’s always something. It’s softening for sure, but historically speaking, the jobs picture is still intact. The consumer on the other end, again, every other month it seems we’re getting, you know, there’s a down month in sentiment retail sales are down. This most recent reading of retail sales was actually quite positive. For July, they’re up 1%. It was the highest uptick since January of 2023, people are still out there spending. Then you look at the other end, what are they spending? Well, credit card delinquencies, 30-plus days have gone up, savings have gone down. So we do have a consumer that’s active, but perhaps at the behest of their savings or their credit card debt. And then there’s also the dichotomy in what kind of consumer we are talking about. On the lower end, we just had the Dollar General (DG) CEO say the lower end consumer, lower income is suffering. They’re not shopping as much as they were. And so we’re seeing kind of a divergence in what type of consumer is spending. So all in all, I think the soft landing picture is intact. I think not all of the data is going one way, but for the most part in historical terms, consumer labor inflation is moving in the right direction. Everything seems to be going in the right direction, at least.
