I just saw the data for the first few weeks of July and the end of day in the first couple weeks of July. The consumers in the
aggregate spent across debit cards credit cards checks written Zell Bunny RBA cash at the ATF arms cash from tellers all the
different ways to spend it. They spent about 9 9 percent plus more than they spent the first two weeks of July 21. The
transaction buying grew at 6 or 7 percent 6 percent plus. That means people are doing more things and so the consumer spending
is strong. The second thing is the customers have in their accounts more money mid month of July than they did in June. And
so they continue to build their account balances especially in the lower wage earning populations we have in our customer base.
We serve all these customers. So to give you a sense the customer that pandemic would have had one to two thousand of
average balances in our accounts had an average of 14 now has seven thousand plus in that account. That same customer two and
a half years later the customer had between two and five averaged thirty five hundred come forward. Two and half years
later they have thirteen thousand. So there's money in accounts. And by the way they're not going down. They went up a little
around tax refunds that came down when they spent some tax refunds. And that was April May. And then you saw them start to
grow in June. And you're seeing a continuing to ISE there. They have money in accounts.
The third thing is are they borrowing. And the answer is we're seeing some growth in our credit cards. Some go through our home
equity balances stabilization or mortgage balances. But the end of day they have plenty capacity and home equity to borrow.
There were 30 billion pandemic loans around the low 20s. So there's that capacity. Credit cards are 95 billion pre pandemic.
They're now a mid 80s Philbin up. That is that capacity. Plus there's other lines. So there's capacity bar. The home values
are still strong. So that's good. So as you look across all that data you say the consumer strong.
Now when you do a survey of what consumers feel like they say your consumer sentiment is down. And that's because they read
about inflation. They hear about inflation. So the answer is what they're saying they see versus what they're doing is kind
of interesting. And then you look at the unemployment levels and wage growth and it's strong. So that's the conundrum. That's the
Fed's toughest challenge. You have a strong consumer and they need us slowdown economy. And that's that's a that's a lot of
work. And so we see everything constructive on a consumer side in our database. And by the way the wealthy customers are same
thing except for frankly they had to pay more taxes in the second quarter 50 percent more by estimates than last year. So
therefore the balances went down and now the recovery is approaching. I think you just put your finger on where the
question is. Certainly that's perplexing to me that a lot of the data indicate the consumers really strong with the consumer
sentiment is really really weak. How could it be that good. Well we feel that bad about it. And I guess the follow on question is
can we talk ourselves into a downturn. How much of this is sentiment and how much of this is behavior.
But a couple of things. So my experience with consumers across the year especially on the investment side which you know I ran
for the company before I CEO for a bunch years you could see the stock market trading volume of retail customers you know
correlate with sentiment. So you know when people don't feel good they don't put as much money in the equity market. You've
seeing a kickback and a little bit now. But you know that went down a lot. And so there's you know these things do play off
each other. So the sentiment out there plays off of stock market levels house price belief.
Whether the debate about whether I'm going to have a job. All those things play off. But the actual behavior plays off of
really one straightforward thing. Do I have a job and am I getting paid. And if I have a job am I getting paid. I pay my
bills. I can from my family. I could take my vacations I could buy the new car and all those things you know and that that
right now you know unemployment in a three year mid threes is a very low unemployment rate. And so that's why the consumers are
spending even though they may not feel good because they're being told worry about European more worry about an energy
crisis or worry about a food crisis. And by the way there is inflation and really worry about that. And inflation you know
there's been many quotes about inflation that people have tried out but it's insidious and it gets on people's minds and causes
behavior change. It just hasn't changed it yet. And that's the key point. That hasn't changed yet. And if they get it right it
start feeling better and then maybe it won't have to changes as much as you say employment is the single biggest indicator of
where we're headed in the economy. Overall employment is extremely strong right now. But does that suggest that if in
fact we're to have a recession which many people including Bank of America reject that we have to get a lot more unemployment
pretty quickly. Well that's that's kind of the interesting thing. If you look at the blue chip economist and you look at
our economist and you look at the street economists as a subset of blue chip economist I just come looking through it. And so
that you know 10 or 11 large investment banks have economists I think we add one other one have a a negative part in 22 or 23.
The rest of you are very slow growth. So you went for a 5 percent growth rate to maybe a 2 percent growth rate or even
less. Down to you know really no growth. Have you seen this thing slow down. The itch thing is all I'm still have
unemployment you know take the blue chip and look at it the highest. It's like five percent which doesn't seem consistent
with the recession level people are predicting because remember we were 5 percent
unemployment moving down to 17 and things like that. So it's a little hard to figure out how people can predict the economy
slowing that much. Unemployment staying strong is because the averages are in the low fours. And that that that's something I
think that people just one side the other side if you listen to the Fed chair he'll they'll talk about they need to have labor
markets is not so tight. And it's very tight. To job openings for every job. But that is that is kind of the conundrum that
when I look down all those stats I sort of say wait a second how can you have that kind of slow economic growth. But that kind of
strong employment in the absolute sense coexist. And the answer is one's got to give. And we'll see one more data point. Brian
if I may you also have access into a lot of American business and not just the really big ones but small and medium sized
enterprises as well right across the country. What are they mainly worried about as you talked to them.
Number one the activity in our small business 5 million under revenue companies that core small business will one of the
largest if not the largest player. And by far as I said earlier the origination activity new loans originated was up about 10
percent year over year to two point nine billion versus two point sixty two point seven. So that's good. That means they're
still demanding credit. Okay. And then we looked at the small business again five main under revenue companies their use of
their small business credit cards that's growing in double digits. Plus that means they're using these the business cards
using it to buy things and do things. So that's that's strong. What they were worried about in our surveys that we do inflation
for them. That's input costs going up wage getting people on how much they have to pay them can even find them if I want to pay
them and then can I fill the orders I have. And so if you talk to the manufacturing people are saying my problem is the supply
chain still moping around and I've got stuff that I could. I've got orders out there. You go out through your year and next year
no problem at all. I just got to get the stuff in to. All the component parts to complete the thing and then sell it.
I've got 60 percent 70 percent 80 percent. And I need to get the labor to do it. And that you know it's a very difficult time to
manage that sort of mechanism. But the good news is they've got committed contracts to take the stuff when it's done. And so
this supply chain is pushed out the demand cycle a little bit because there's just a lot of stuff that still has to be
manufactured and sold you know in various industries in that 50 million and under revenue company itself. They all worry about
all the things you read about the paper because they read the same papers and think about it and actually see them day to day
execution supply chains labor tightness input prices. But on the other hand what they also see is good demand for their products
and services which gives them optimism.