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How food inflation is creating debt, Target Q1 preview: Wealth!

On today's episode of Wealth! Yahoo Finance's Brad Smith is joined by various guests to discuss the state of the housing market, the ongoing spending pressures faced by consumers, food inflation, and more.

Opening the show, Yahoo Finance's Dani Romero breaks down the rise of homebuyers under 35 despite rising housing costs. Abbe Will, Harvard Joint Center for Housing Studies' Senior Research Associate and Associate Director of Remodeling Futures, also joins to explain why homeowners are steering clear of renovations.

As the state of the consumer points to increased price pressures, Yahoo Finance's Seana Smith delves into a report that revealed Macy's credit card holders are increasingly becoming delinquent on their payments. The show also previews Target's (TGT) earnings expectations following the company's announcement of reduced prices on nearly 5,000 items to help bring relief to consumer wallets.

Finally, the show shifts focus to the impact of food inflation. Salad and Go CEO Charlie Morrison joins Wealth! to discuss the uptick in value offerings as a strategy to combat inflation. Host Brad Smith then breaks down the mounting debt Americans are building just to afford groceries.

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For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Angel Smith

Video transcript

Welcome to wealth everyone.

I'm Brad Smith and this is Yahoo Finances guide to building your financial footprint.

Our community of experts will give you the resources, the tools, the tips and the tricks that you need to grow your money.

Hey, on today's show, Lowe's quarterly results revealing Diy do it yourself.

Consumers are pulling back on big ticket items.

We get an expert to weigh in on when we can expect to see a recovery in the home improvement sector and think about investing in retail.

It's a big question out there.

The CEO of the big financial analysis firm gives you his three top stock picks in that retail segment.

Plus fast food chains are offering more and more value meals to help consumers.

Contend with inflation.

One restaurant executive will tell us his case for why this might not be the answer all that much more.

But first we take a look at some of the market action.

We're 90 minutes into today's trading activity, taking a look at the Dow Jones industrial average, the S and P 500 the NASDAQ everywhere you look, we're green right now flat barely to the upside.

So we'll keep a close tab on that going forward here right now.

This is coming off of a week where we've seen some new record highs for the NASDAQ and the Dow and today and closing also, let's take a look at Lowe's Lowe's customers pulling back on their hammers and nails again.

This quarter, the Home improvement retailer saw consumers cutting back their visits and spending less when they go.

But our next guest see the tide is turning as the housing market starts to recover.

And for more, I'm joined by Abby Will, who is the senior research associate at the joint Center for Housing Studies of Harvard University.

Great to have you here with us, Abby to kick off this conversation.

First and foremost, you, you think about results and the trend of what we're seeing from even companies like Lowe's coming out and talking about the diy consumer.

What does that really spell out on a more broad macro scale from your perspective?

Right.

So our current projections indicate that spending on renovations and repairs in the US will soften moderately this year down 6.6% from our estimated spend of 463 billion in 2023 down to 451 billion in 2024.

So I think this certainly lines up with what we've been seeing in uh the retail sales sector.

You know, the the hardware store sales, um, homeowners have been uh pinched by high costs, uh certainly, uh inflation, you know, as high as it's been across the economy, uh more broadly, it's been even more extreme in building materials in costs of skilled labor.

Uh And I think homeowners are, are reacting to that this year.

We, we are anticipating that the market um may be bottoming out this year.

Right.

That's certainly what our current projections show that will bottom out uh kind of in the second half of this year and, and start to actually head towards uh recovery uh into early next year.

Certainly.

And so th that considered abby when we're thinking about either the remodel projects or the kind of rental markets that even is keeping a lot of people locked in at this point because they're priced out of getting into a good interest rate or getting a home or the supply.

And that's the issue.

I mean, there's so many different factors, what is, what's having the most outsized effect from your perspective and from your study here.

So we do see that this softening in spending and home improvement and repair spending is partly driven by the ongoing weakness in the housing market, right?

Those high mortgage rates uh preventing folks from buying from moving.

And it is the the weakness in existing home sales that is, is really a big factor in our our forecast for softer spending this year.

Uh A lot of remodeling does tend to happen around the time of the sale.

You know, folks might, might do some work in advance of putting their home on the market.

But in particular, recent home buyers, uh, typically spend considerably more for home improvements.

So, like on average, a recent home buyer in the first several years after purchase are spending 30% more for home improvements than homeowners who've been in their homes for, for, for longer.

Uh, and, and so I think the, the, um, certainly that decline in, in home sales that we've seen over this past year until this year, uh, is hurting.

Uh, the market overall does, does a pull back in some of the diy projects signal to you perhaps where consumers or, or, or where potential home buyers are also saying, you know what, we're just gonna start to save up a little bit more instead of, you know, putting more into what we currently own right now.

If we start to save up, then perhaps we'll be best positioned to capitalize on what's gonna be, uh, perhaps heavy bidding period, once rates do become more favorable as well.

Yeah, absolutely.

And what we do see, uh, you know, during kind of times of, of a softer market, housing market, remodeling market is that homeowners do shift their spending, the composition of their spending.

So it shifts from, uh, being relatively more focused on the discretionary projects.

You know, the types of projects that homeowners love to do the kitchen and bathroom models the room additions to really focusing more on what needs to be done.

Right.

The, the need to do projects, we call them replacement projects, you know, roofing, window siding systems and equipment, all of the work that can only be put off for so long, um, before it just really becomes necessary and those projects, you know, homeowners will continue to spend for them.

Uh They, they really need to, especially considering considering our very old and aging housing stock.

Right.

So, so fully half of homeowners today are living in homes that are at least 40 years old.

And so, you know, that, that alone, uh I think is really helping to drive a lot of the replacement spending that that has been happening and that we continue to expect uh this year too.

Certainly.

And so what are the diy projects that still makes sense for people to do in, in order to get the best return on that investment?

Yeah, I mean, and Diy, you know, I think a lot of projects that are done diy often are more in the discretionary realm.

I'm certainly if, if a homeowner feels they have the skills to do some of those replacement projects, but, you know, not, not a lot of diy roofing replacements, for example, uh it's just not, not a popular uh project there.

Um But the, the smaller scale projects, you know, the, the kind of maybe doing a, a um partial kitchen remodel, you know, replacing the countertops, you know, refacing the cabinets painting, uh, all of that can, can be done, uh, much more, you know, easily as a diy project and certainly would provide, you know, enjoyment for homeowners to, to kind of freshen up their spaces knowing that, you know, they might not be able to do the bigger full remodel, uh, this year or, or really until, you know, the market changes or, or they just feel, feel better about making those bigger investments in their home.

Abby, thanks so much for taking the time here with us today.

That's Abby will, who is a senior research associate at the joint Center for Housing Studies of Harvard University.

Appreciate it.

Thank you.

Let's stay in the housing market here.

A new red fin report reveals Gen Z and young millennials took out 40% of mortgages in 2023 to break down the state of housing for us.

We've got Yahoo Finance's very own.

Danny Romero here with us in studio.

Ok, le let's break down some of these findings here, Danny.

Uh what particularly stuck out Jen Zier and young millennials got more skin in this home buying game.

Like we said, nearly 40% of the new mortgages issued last year to buyers under 35 years old.

That's what Redfin reported.

And there are three reasons.

One of them being, people typically buy their home in their late twenties to early thirties.

They, that's gives them enough time for saving for that down payment.

It also becomes more financially feasible and desirable.

And the second reason is that many people still view that real estate is a safer long term investment compared to investing in the stock market.

And the third reason is really young buyers, typically, I don't have a lot of cash on hand.

The acronym Henry high income, not rich yet comes to mind.

Uh so that they're more likely going to take out a mortgage uh Redfin reported.

But another interesting aspect of this report is that about 48% of the new mortgages were issued in Pittsburgh.

The median sales price in pits, Pittsburgh is around $260,000.

We compare that to the national median sales price uh which is $420,000.

That is a difference of 100 and $60,000 cheaper, right?

Well, below the average there nationally here.

So uh some favorability on on pricing perhaps.

But I mean this as us home prices have continued their sent here.

So we're also seeing a near record high of newly homes built here too.

Of course, in the jousting for existing homes versus new homes.

What do we know about the positioning?

Because uh this is particularly alarm, not alarming, but this is, it's shocking actually really because existing homes have typically accounted for what like 88% of the homes that are sold.

This is a good thing.

Yes, newly uh newly built homes continue to outperform and really take over this inventory side of the housing equation.

One third of single family homes for sale were in the new home market.

And that was similar to last year if we compare that.

But the new home market has doubled since the pandemic.

And there are two reasons home builders have a home building has shot up, construction has soared since the pandemic, especially that builders are responding to that buyer demand.

And the two and the second reason like you said, the weak supply in the resale market is really helping that story come to life.

Uh, homeowners are staying put, they're not buying right now.

And so builders are offering those incentives the mortgage rate by that buy downs excuse me, when the builder upfronts the costs to lower the rate on the loan that is really attractive and also the sales price in the new home market also seems a little more attractive.

Brad.

Yeah, it seems like also the same time here, builders have eased up slightly on some of the housing starts due to high mortgage rates, dampen demand.

Many of them still trying to offload the glut of homes that they started developing.

What?

Back in 2021 and 2022 here too.

They're not gonna stop though.

No, not at all.

Danny, thanks so much for taking the time.

Appreciate it coming up everyone.

Do you have a Macy's credit card.

We reveal what the retailer earnings say about delinquency rates.

Plus later on, we're gonna hear from one guest who tells us why he's strictly bullish on athletic apparel retailers.

Oh, yeah.

The business of the stretchy fabrics don't go anywhere.

Macy's is out with its first quarter earnings report and one big take away more consumers with Macy's credit cards are falling behind on their payments.

Joining me now in studios with the details is my morning brief co anchor Shawna Smith.

Ok. You've been diving into this one,?

I've been diving into this.

Well, ever since you and I were on air not too long ago.

And let's talk about what we learned from Macy's here this quarter because when you take a look at their credit card revenue, we did see a drop in terms of what we saw a year ago.

So credit card revenue net declined by 45 million, falling down to 117 million.

Why are we seeing this decline?

Well, it's because of a weakening consumer within this report, Macy saying that this decline was attributed attributable to the impact of expected higher delinquency rates.

A trend that we've seen here from a number of retailers here in recent quarters and also net credit card losses within the portfolio.

And this is also consistent with the data that we are seeing even outside of earnings when you take a look at the recent numbers that we're getting here from the New York Fed.

And they're saying that credit delinquencies and a year over year basis, that change was falling by about 8.9%.

As we do see our excuse me rising 8.9%.

And then the total us household debt that actually increased by about 1.1% from Q 4 to 17.69 trillion average credit card debt per borrower.

That is now just over 6200 bucks here.

So we bring all of this up because this really paints a picture of what is happening right now.

When you take a step back, everything that we've learned from the earnings so far this season, taking into account while we're hearing from Macy's on this earnings call this morning where they're saying yes, the consumer is under pressure.

They likely will remain under pressure for at least the remainder of this year.

They're making some changes, adding promotional activity here in order to try and boost sales, you see reflected in the delinquency rates.

Clearly, there has been this pressure because of sticky inflation, uh that has forced consumers to make so many of these tough choices.

And that's also reflected I think and so many of these stock prices here because you and I have been talking to strategist after strategist who has said the consumer consumer discretionary sector has been under pressure.

A lot of that.

A lot of those bigger names will likely remain under pressure as they try to navigate what this new normal is going to look like here for these retailers, at least over the next couple of quarters.

I just find it and you know, I find it fascinating how executives are talking about the consumer and how that's changed the delta between this time last year where it was, hey, the consumer is resilient everyone to now, the consumer is under pressure, the consumer stretch or relatively stable like we heard from Walmart CFO Yeah, exactly.

And also just the difference that we are seeing from the lower income consumer versus the higher income consumer.

And that was also on display in Macy's report, right?

Because when you take a look at the Macy's brand, that was under pressure.

But then when you take a look at Blue Mercury and a number of prints here, even within Bloomingdale's business is showing more resilience than its namesake brand.

So we are seeing that discrepancy, which is certainly worth noting.

We will be getting earnings results out from target also this week, which will paint a bigger, a better picture of exactly how the consumer is feeling right now.

But again, at least the sentiment is we will likely hear similar commentary to what we heard from Walmart.

If people are trading down, they are foregoing some of those larger ticket, uh bigger ticket uh purchases for those staple items.

And as a result, likely to remain under pressure here at least in the short term.

Well, I can't wait for the target earnings.

I just got a LEGO set from target just last week.

Yeah.

Well, I mean, well, yeah, for myself.

Look, I'm just trying to be like, I, I'm trying to be like I play with my four year old then done.

Do.

I'm trying to be like Victor Wanyama.

So maybe we'll get Victor, we'll get, you know, your son and myself and we'll have a grand old time with somebody that goes.

All right, thanks so much, Sean.

Sticking with our retail discussion.

Investors are also watching names like Target bjs, TJ, Maxx and Ralph Lauren ahead of their quarterly results this week.

And our next guest says the athletic retail is the place to invest here to weigh in.

We've got Tony Zara who is the equity set chief executive officer, Tony.

Great to have you here in studio with us.

Thank you for having me.

Absolutely.

All right.

So let's dive into this, walk us into your thesis here on the athletic apparel side of retail.

So ath leisure definitely had its headache in the last couple of years, obviously with, with COVID and staying indoors and remote work.

Uh, you had huge run ups right in, in stock prices and, and discretionary spending.

Uh, the thesis now is they've actually over the last year and year to date, massively underperform not only the market but the consumer discretionary and retail, uh, other names and ETF S. So banking on a bounce back here.

Correct.

And, and banking on a couple names that we feel diversify in, in terms of product line price points.

Uh And really, they're the stalwarts in the industry that even though they're not perfect, they have been around and they're generating massive profits and cash hoards.

What's your assessment right now of the ability to generate demand through innovation through some of these companies?

Yeah.

Um We were talking a little bit earlier about it feels a little stale, right?

Uh So when you're looking at the the big players, Nike's Lululemon's Under Armours while Under Armour might be kind of the newest one with some of its celebrity collaborations, right?

Obviously, Nike's been doing it for decades and doing it well.

Uh it, it just seems like the same product with a different face on it, right?

Uh And same thing with Lululemon yoga pants, right?

Some nice uh breathable polos for golf and going out to the bar after, but uh it really has to improve in order to kind of drive sales and demand.

Uh But that's where we think if there's a waning of consumer spending, at least those are safer bets than some of the newcomers in the space.

It's not the bar if you just call it the 19th hole.

Um You know, at the end of the day, we also have a critical year for all of them and there's gonna be a lot of competition amid the Olympics.

It's an Olympic year.

Of course, you've got the uh 10 pole events and we were speaking with a couple of analysts about this earlier on today and how critical and actually the CFO of Amer Sports we had them on morning brief earlier today, just talking about how critical of the year this is with the Olympics, with a lot of major events that are taking place and companies needing to get this right?

What happens if they do not?

And what's the difference between the winners and losers there?

Honestly, I think they'll be fine.

Um And, and that's strictly from a valuation perspective.

A lot of what we're seeing with names like Nike under armor Lululemon is it it's really already priced in, right?

So if they don't do well, um you've seen them fall 20 30% whereas yes, uh there is a chance that they're losing market share, but a lot of that market share is growing, right?

There's reports out that right now around 330 billion in ath leisure consumer spending that supposed to be at a 9.3% compound annual growth rate until 2030 which puts the market nearly double.

Um And so while optics news might not provide the best headlines for the shorter term trades uh on those names, really, I don't think in the long term it matters that much to the bottom line for them.

We, we just had a company in Under Armor put out their fourth quarter and in full year results here for a fiscal 20 four.

just last week thinking through the management of this company and the revolving door that has been what should investors be keeping tabs on there and, and what this management team needs to do and make no excuses for under Armour's results were terrible dismal.

Um You saw it pushing down heavy.

Um And then surprisingly had a lot of buying and it kind of pushed it up and it's right around those same levels.

Uh And that's really, it's a value stock um because of all those issues right now, right, you're looking at half times price to sales.

Does mismanagement classify a company though as a value stock regardless of the environment.

Good point.

Um And so I think with, with former CEO S, a lot of it is, it's gonna have to be a turnaround story.

So I think that's where if they can get it right with management coming in, uh shaking things up and pushing the company in the right direction, that's the play that then it becomes a value stock right now.

It's a little bit of a gamble, right, in terms of its valuations are low, but they're low for a reason.

Uh because there's a lot of questions around whether they can sustain it.

There's, there's a lot of, of course litigation that is always taking place with these companies, um whether it's Nike and New Balance or whether it's Adidas and um and Lululemon, I mean, it, it seems like there, there's always something that gets kind of lobbed at the other enemy territory, time and time again here.

But is there anyone that's clearly running away with the consumer mindset at this juncture?

I would say Lululemon may be the closest, right?

Um They Nike's had a lot of bad press um and issues come up with supply chains, international market shrinking.

They've been around for a while, right?

Kind of that.

That bodes well for where they're in their business cycle under armor.

We know of their issues.

Um Lululemon is the one that uh they haven't really made any major moves and, and so I think that's where they have the the cash they have, they're having the growth uh in order to reinvest in something big.

Um And that's where I think they're gonna be focused on the right things the most out of the other two.

All right, Tony Zarro, who is the equity set ceo joining us here on set all the way from Chicago.

Thanks so much for taking the time.

Thanks for having me on Wednesday.

Everyone target will release its latest earnings report here with what you the consumer should know is our own, Josh Lipton.

Hey, Josh Brad target, earnings are indeed on tap for the first quarter.

Analysts are expecting earnings per share of 205 on revenue of $24.13 billion.

Now, that would represent a drop year over year of about 3.3% heading into the support.

The stock is up about 10% this year.

Among financial analysts, opinion fairly divided on Wall Street, 20 buys 15 holds and one sell companies.

Now trying to bounce back after last year's performance when annual revenue declined for the first time in seven years.

But Target we know has a game plan to boost shopper traffic and profit.

It's really a three pronged strategy here, upgrading existing stores as well as plans to open more than 300 new stores.

A paid membership program called Target Circle 360 expand its own higher margin private brands which represent roughly 30% of its business now and more immediately.

Just this week, Target announced it was cutting prices on 5000 items this summer that includes 1500 items getting price cuts right away.

I spoke to D A Davidson's Mike Baker.

Now he has a buy rating on Target.

Yes, he says company had a challenging 2023 but he sees better times ahead tomorrow.

He the cop is gonna say that Q one comparable sales were those from stores and online channels were down about 3%.

But Baker bets that this will be the last quarter of negative comps and looking ahead, he thinks the company's margins are gonna get back to historical norms, meaning in that 6% range.

In part, that's because Target, he says is getting more efficient when it comes to online delivery.

Now, Target does have big competition, of course, including Walmart which reported earnings last week.

If you are an investor, can you be a fan of both names?

Baker says yes, because these companies represent two different investment ideas.

Walmart, he argues is the best of breed company that is simply firing on all cylinders right now.

Target he says is a turnaround story and one that he believes is gonna work Brad back to you.

All right.

Tons to track in the retail landscape this week.

Josh, thanks so much for teeing up target for us.

The brand of the bull's eye.

We've also got a slew of fast food giants starting to offer cheaper options.

This year, we explore if that's enough to bring price conscious consumers back into those aisles and into those stores.

Either way here, we'll be right back after the break.

Wendy's is now offering a $3 breakfast combination meal.

The deal includes potatoes, your choice of either bacon or uh bacon, egg and cheese or English muffin or a sausage, egg and cheese, English muffin all for three big ones.

And this isn't the first fast food giant to offer a value meal mcdonald's and Taco Bell.

They are also been unveiling cheaper items so far.

This year, this comes as fast food chains are grappling with a more price conscious consumer between 2014 and 2024 the average fast food menu has risen between 39% and 100% according to finance buzz to break down if this is the right move for fast food chains, Charlie Morrison, who is the salad and Go CEO is here with us, Charlie.

Great to see you.

Great to speak with you again here.

You know, as we think about these temporary value meals, are they the right strategy for some of these quick service restaurants out there?

Well, I think providing access to consumers for a good value is absolutely always the right thing to do.

The challenge we're dealing with right now is something that's quite cyclical chains are taking lots and lots of price when they feel like they can and then when the consumer starts to push back, we go right back into the cycle of value orientation.

What doesn't seem to be working is the idea of sustaining an everyday low price and a price that consumers can afford for access to good food and healthy food at that.

And so what does normalizing fair and, and valued pricing look like over a sustained period of time?

Well, I think it all starts at the core of how businesses are built and the food systems that we have today.

Um, there are a lot of people who are involved in the food chain all the way from the growers through the processors, to the folks that bring the food to the chains and the chains themselves.

And so with so many people playing in this, it's really hard to get back to the core of what is most important, which is providing access to healthy food.

This inflation is not just the food itself, but it's everything on top of that, everything that goes into it.

And what we need to do is completely rethink the whole food system to make sure that we can provide value back to the consumer at our company.

That's what we do.

Um We've built the food chain from the bottom up.

We've gone straight to the growers to bring great value to a consumer without having to discount as a means to take a little bit of uh, of the heat off from these really high prices.

What is the biggest delta that the food system needs in order to sustain value?

I mean, is it more farmers, is it more vertical farming?

What is the thing that and CEO S like yourself would like to see more of either on a regulatory perspective or even just from uh supply and production perspective.

I've been in this business now for roughly 30 years and uh over that time, a good example, you brought up farming.

Um, the price of corn really hasn't changed, uh, over that entire period of time, it's highly subsidized, of course.

Um But if you follow the consumer price index over those years.

It should be much, much higher.

What we're doing is we're, the farmers are the ones that are struggling.

Quite frankly, they don't make a lot of money in this process where the real money is made is throughout the rest of the food system at our chain.

What we've done at salad and go is to start to really rebuild the process.

We start by going vertical.

We own all of the processes in between the farm to our fork and the salad that you eat.

And in doing that, we're able to return that back to the consumer.

In the form of a very low price.

We offer a 48 ounce bowl with salad and protein for under $7.

That's unheard of in today's economy, either in fast food or fast casual food, especially for a healthy option.

And so I think it can be done, but it's going to come us, it's gonna require us to retool everything to do it, right.

Are, are there considerable shifts that you're seeing right now in the consumer appetite?

And I, I know that you and I have have talked collectively with our team here about GOP ones and the impact on tastes and appetites.

But if you're noticing anything among the people that are still coming in and buying lunches or buying dinner or, or buying breakfast, Steven, where that largest shift is right now and how that kind of throws a wrench in the way that CEO S like yourself may have thought historically about this industry.

Well, I, you know, we have talked about the G LP ones and other options.

I mean, pe people are looking for ways to, uh, adopt and, and, and sustain a much more health focused diet and lifestyle.

Uh, it's very expensive to do that.

Uh, today people would probably have to pay somewhere around $100 a week just to have a fresh salad for lunch.

We think that's unacceptable.

But until we really rethink and retool the food system, we're going to be plagued with this challenge and we're going to go through these cycles where we have high prices and price increases.

Um, consumers are willing to tolerate that followed by value orientation cycles like we're going to go into right now.

I've seen it happen year on year in and year out.

It's, it's natural in this business.

We've got to break that cycle and I think the only way to do it is to really take a hold of the entire supply chain and rebuild it so that we can get consumers closer to the actual rock commodity itself, the product and eliminate some of that unnecessary cost in the system and transfer that back to them in the form of something they can afford to eat and still eat nutritiously and healthy for a long time to come just lastly while we have you here and just to pick up on what you just mentioned here because people here rebuilding the, the, the supply chain.

And that sounds very daunting.

Uh What does that look like if activated?

Well, it takes a lot of capital and today's investors is, is challenged by uh you know, the, the a significant capital investment to do that.

But if you're gonna do it right, rather than wait until your chain is scaled and very large, we're actually going against and disrupting the norm and building that capital investment into our chain in the early stages.

Um, it's usually something that people will challenge, but quite frankly, we think it's the right way to build a business.

There are a lot of companies who have done this over the years.

The likes of Amazon and Costco and others provide an everyday great value to consumers, but they put a lot of capital investment to do it right.

And, uh, that's how we're approaching it here, Charlie Morrison Salad and go ceo great to see you again.

And thanks so much for hopping on with us.

Thank you.

Absolutely.

Well, if you've been shocked by your grocery bill in the last year or so, you're not the only one, a new report from the Urban Institute finds that many families relied on credit and savings to meet their food needs.

In 2023 3.5% of adults used by now pay later for their groceries and 37% of those who used B NPL reported missing payments on those loans.

Even more.

Shocking, nearly one in five adults paid for their groceries with savings that they didn't intend to use for everyday living expenses.

And if we look closer at who is most affected, the report finds adults with low food security were more likely to experience debt repayment challenges relative to those reporting less severe food hardship within the food service landscape.

We're seeing many fast food chains try to address the pinched wallets of consumers by offering value meals.

Wendy's offering a $3 breakfast combo meal and then mcdonald's is running a one month deal beginning this summer for a $5 meal in Taco Bell.

They've also en cloaked a new value meal of their own.

So even as promotional offerings are being introduced from fast food and quick service restaurants, top brass that some of the nation's largest retailers are still monitoring the health of consumers across drive throughs and grocery aisles, Walmart CFO John David Rainey, telling Yahoo finance the consumer has been relatively consistent.

Adding later, we see that wallets are still stretched and they're looking for value right now.

Much more on wealth after the break.

Everyone, you're watching Yahoo Finance, a new Bank of America report finds more Americans today feel financially well than a year ago, but the majority still have concerns about the cost of living increases here with more.

We've got Lorna Saba who is the Sabia, excuse me, Lorna, Sabia, who is the Bank of America head of Retirement and workplace benefits?

My apology, Lorna.

Great to have you here with us first.

Walk us into some of the findings here.

And what jumped out to you most notably?

Sure.

Thanks for having me.

First of all, we've been doing this research for the last 14 years and we basically look both at employers and employees sentiment.

And so like you said, financial wellness, folks are feeling better than last year.

So 47% this year said they feel more financially well versus 42% last year.

Some of the things that I want to make sure are clear though, within that, because there's a lot sort of tucked in is the difference between men and women is actually marked.

And so 58% of men feel financially well, only 36% of women feel financially well, that 17 point gap is actually the second largest that we've seen in the last 14 years.

So I'm a little concerned about that.

And if you even unpack that further, um we see that Asian employees are actually most financially well, at 58% followed by white Caucasians at 50%.

And then it actually starts to, you know, deteriorate a little bit 36% and 35% for Black African American and Hispanics as well.

So I'm always concerned about, yes, the top line is important, but unpacking that and really understanding the demographics of a particular company are equally important.

There's a lot, this study is rich, there's a lot in here that's uh that's really compelling and caregiving is another topic in that regard.

Yeah, absolutely.

And, and Lorna, you, you broke down a few things within that.

I wanna dive first back into what you were mentioning on the gender front there and what we're seeing in terms of the disparity there.

Is there a leading cause right now?

Is it compensation?

Is it cost based?

What is it that kind of jumped out here?

Yeah, I think caregiving is at the top of the list.

And so probably if you look at since the pandemic, the caregiving topic is smacking women in particular, it's a female topic.

And so, you know, when I think about that, that's probably first and foremost, right behind it is exactly what you just said, which is pay equity.

And so, you know, when you think about even a woman's life stage versus a man, it's just different, right?

Oftentimes caregiving whether it's having Children moving away from the workforce for a period of time that stops things like access to benefit programs like a 401k, it stops things like access to social security credits.

And we know that women live on average five years longer, on average, they retire five years earlier and they have disruptions in their career.

And so you put on top of that any disparity in pay that actually over a lifetime can translate to about a million dollars of wealth gap.

And so I think caregiving in particular and that pay equity topic, you know, it's, it's interesting we're finding even in the survey that employers who are focused on pay equity topics and talking to their employees about it, obviously, they're accessing the best talent.

Everybody wants to work for a company that is going to pay fairly.

Um It's just we need more companies to actually focus on that as well.

Certainly.

And, and so of that, what also kind of transcends over onto the what you were mentioning in terms of the the ethnic kind of breakdown there as well too because that also had its own disparity.

We've heard over the past years about corporations saying that they're going to be doing more to either eliminate biases and making sure that within their hiring and compensatory practices that they are uh having a mind for equity as well.

Is that actually panning out right now?

It is we're seeing more and more companies, first of all interested.

So when we work with companies of all sizes, we talk about some of the analytics that we can provide.

But when you think about that, that means the way you educate, the way you communicate about the benefits that you have is really important.

So you reach all populations, many more companies understand the dynamics of their demographics within their organizations if I was to rewind the tape, even 5 to 7 years ago, many less companies were even focused on that.

And now many are reaching to understand how best do I focus on pay equity practices where it's an unbiased look at compensation and actually address that.

So there's a lot of sharing of best practices in that regard.

There's been a lot of innovation with companies providing whether it's software or indices that can help companies actually with their equity programs.

And so we're seeing a lot more interest and a lot of progress there, which I think is great for employees of any industry.

Then additionally, we were just showing on screen one of the stats here, 76% of employees believing that the cost of living is outpacing their growth in the salary or wage fund that's compared to s 67% in June of 2023.

And I and I come back to this and bring this back up because this also has a bigger impact on future financial planning too.

And so where is that kind of also hitting the mindset?

Uh and, and preparedness to being able to get towards retirement, being able to get towards financial stability, right.

It's a great question.

What's interesting though?

We also found that um actually last year, 63% of folks felt that the economic macro environment was actually gonna deteriorate their preparedness for retirement that has moved to 53% So there's some optimism there.

What's interesting though is inflation is inflation and it's your own personal experience about what you're actually, you know, buying and what has changed in those prices.

And so I think folks understand that now and they're actually changing their behaviors, whether they're spending on different items, whether they're spending less in general.

But the sort of, you know, to me the, the sentiment that we actually see are people are actually understanding that better this year, they're not as afraid of it as it relates to their retirement preparedness.

But it's still a time topic.

Inflation is still a topic for sure.

And my co anchor earlier was making fun of me for buying a Lego set.

Recently, I'm not buying as many as I was in 2021 but certainly, um you know, treating yourself every once in a while here.

But Lorna, thanks so much for taking the time breaking down some of these key figures around financial wellness and the mindset of so many that are out there in the economy.

Lorna Saba, who is the Bank of America head of retirement and workplace benefits.

Thank you.

Thanks so much for having me.

The American middle class is an idyllic picture of a family living in the suburbs, adults that work hard but make time to barbecue on the weekends and have at least one vacation a year.

But in recent years, economists are seeing signs that this once dominant class of people are losing ground.

So what does it look like to be middle class across America?

Our very own Michelle AFA is here with some of the data, Michelle, what have you found?

I mean, we know that we're going to hear a lot about the middle class, especially as we head into the political season.

But there are good reasons why the middle class don't feel as if they're doing well financially Despite what the GDP or inflation data is saying, now there are three things to consider your location, your household incomes and previous generations.

So as we use the latest census data from 2022 the real median household income nationally was $74,580.

So think of that then with that location, with that uh amount in mind.

Now location as a baseline.

When you're calculating who's in the middle class, it's typically defined as households making two thirds to double the median income of residents in your state.

So keep in mind that factors in higher income, lower income, the whole picture here.

So when you dig into individual state data, household incomes, where you see states where you have to earn the most to be middle class.

Well, if you live in New Jersey, Maryland or New Hampshire, uh you're, you're up here, New Jersey looking at the low range of being considered middle class, $64,231 to the high range of 100 and $92,000.

Uh 100 and $92,692.

Maryland, similarly 63,000 at the lower range of almost 100 and 90,000 at the higher range as well.

And then looking at New Hampshire, looking at 59,995 to about 100 and 79,984.

So if you think the six figures aren't stretching as far as they used to, it does depend on where you are.

Now the states where you're actually the closest to that national median household income.

Well, that's looking at Utah, Alaska and Idaho.

And there you see between 51 and 53% of the population are middle class earners.

Now the South as a region have the lowest median household incomes with the majority of the middle class range there looking at the middle to high 50,000.

So when you think of that range of where the high 50 thousands in the South versus being close to $200,000 in Maryland, New Jersey and New Hampshire, that is why if you, especially in those states, you're really feeling the pinch more.

You're not feeling like you're in the middle class.

Yeah, absolutely.

Michelle.

So how have previous generations fared?

And I feel like I know where this is going.

I mean, you know, you always hear those, those, uh, anecdotal stories where, you know, you used to be able to buy, you know, a can of Coca Cola for a nickel.

Those times are long gone.

And I mean, pew research data shows that the size of the, the middle class has actually been shrinking steadily since the 19 seventies and at a faster pace than upper income households have been growing.

And then when you compare previous generations in the US versus other countries, according to the OECD, each new generation in the US has been even less likely to join the middle class than other OECD member countries which tend to be these higher earning economies and do include the US.

And then when you factor in other ways that we can compare our lifestyles on social media without knowing the debt and the financial strains behind the scenes while you're struggling to pay for groceries, you know that alone, you can't even feel like you can treat yourself.

These are some of the reasons why all the economic gains that you hear about.

People aren't feeling to the same degree in every state.

Brad finger snaps for that one.

Absolutely.

Don't compare yourself to someone else on social media.

You don't know exactly what's going on behind the lens as well here, Michelle, thanks so much for taking the time.

I appreciate it.

You're welcome.

We've got much more on wealth after the break.

You're watching Yahoo Finance, everyone cryptocurrencies have been on the rise over the past 24 hours amid speculation that the SEC may soon approve Ether exchange traded funds or ETS for short, for more on why this could be good for your crypto portfolio.

Is Yahoo finance contributor, Ross, Mac Ross.

Take it away, Brad.

Thanks for having me.

Listen, when it's all said and done, this is great overall for the industry, right?

We're talking about it's gonna break it a lot safer.

Obviously, it's more regulated, but not only that, right.

It's actually making it more accessible for the average investor, right?

We're not talking about having to go open up another account.

Uh We're not talking about having to go get a digital wallet or even a ledger.

Now, we don't want to confuse people about should you self custodian and actually hold your assets, put it on a ledger.

We're also talking about making the overall asset class a lot more legitimate.

Right now, regulatory bodies are actually getting involved.

What does that do?

It actually gets us past that dark cloud from the sandbank of free Air and a lot of other, you know, unfortunate instances that we may have, right?

We're talking about bringing big big asset managers into the space, whether we're talking about fidelity or blackrock, right?

I think that form of legitimacy is gonna bring some level of stability to the overall market and we also have improved liquidity, right?

I think that um when you have these big long only asset managers we may not.

And obviously, I don't know, you know, I don't have a crystal ball but I don't, I don't think that we're going to see those big 40 50% swings in a month that we once saw in the past.

And, uh, when it comes to, you know, the rumor, when it comes to Ethereum now being approved of actually having a spot, Ethereum ETF that's phenomenal for the overall Ethereum asset class as well as all the people that have been champions of Ethereum for quite some time.

Because if we look at history and we look at actually what happened with Bitcoin and all the rumors of the 11 ETS being approved.

Well, guess what, Bitcoin actually rallied well, leading up to that point.

And I think that this is obviously a by the rumor, sell the news kind of thing where I think that, you know, over the course of the next month or so, we should potentially see Ethereum outpace some of the other cryptocurrencies.

Ross.

Thanks so much, keeping close tabs on some of the latest crypto ETF s to be discussed and potentially getting some green lights here.

Thanks so much.

My guy, let's do a final check of the markets here and check on some other areas that are in the green, the dow, the S and P 500 the NASDAQ all holding on to gains, the NASDAQ by the hair.

It's Chinny Chin Chin.

We'll see where it closes at on the day that does it though for wealth for this 11 to 12 a.m. hour.

I'm Brad Smith.

Thanks so much for watching.

You can stay tuned for market domination that's coming up at 3 p.m. with Julie Hyman and Josh Lipton.

You don't want to miss it.