Listen to the full episode, here.
Key Points
- Sam asserts that corporate earnings reports were the most reliable data source for assessing consumer health, especially during a government shutdown when official economic data was unavailable. [03:33]
- He observed that company margins had not seen a significant degradation, which he interpreted as a sign that the consumer was in decent, albeit not spectacular, shape. [02:52]
- He argued that the impact of tariffs on consumer prices had been minimal because companies were absorbing the costs, getting exemptions, or pushing back on manufacturers, and because consumer demand was changing for other reasons. [09:45]
- Clement identified a major post-COVID shift in spending from goods to experiences (like “revenge travel”) and a preference for quality over quantity, which he believed was a broad trend across generations. [12:40]
- He pointed to two primary business tactics for engaging consumers: increasingly sophisticated targeted marketing driven by data and AI, and the pervasive use of subscription models across nearly every industry. [16:26]
- He provided a personal anecdote about a retail app using his purchase history to predict a forgotten item (diapers) as a clear example of how AI was already directly influencing consumer purchasing and driving revenue.
John Norris (00:30):
Well, hello again, everybody. This is John Norris with Trading Perspectives. As always, we have our good friend, Sam Clement. Sam, say hello.
Sam Clement (00:35):
Hey, John. How are you doing,
John Norris (00:36):
Sam? I’m doing fantastic, and I hope you are, too.
Sam Clement (00:37):
I’m doing great.
John Norris (00:39):
One of the questions out there—I’m actually starting to get it here at the beginning of October 2025—is: what sort of shape is the U.S. consumer in now that we’re heading into the holiday shopping season? Every year around this time, we’re getting close to Thanksgiving and Christmas. I can’t believe it because it’s still 80-plus degrees outside and dry as a bone. But, in any event, people are talking about the holiday shopping season. Is the U.S. consumer in pretty decent shape right now with the government being shut down and not getting any official economic data? Even before that, the veracity of some of the data was being called into question. What do you think is the true health of the U.S. consumer?
Sam Clement (01:21):
To me, the real data on the health of the consumer—luckily for us with the shutdown—comes from earnings reports.
John Norris (01:31):
Okay, fair enough.
Sam Clement (01:31):
That’s what I look at. But yes, you’re spot on that the official data—jobs, inflation, retail sales—gives us pieces of the mosaic of where the consumer is.
John Norris (01:49):
I like it—little individual tiles. Recently, what have some of the country’s retail companies been telling us?
Sam Clement (01:58):
Things have been tough for some companies, it seems. In my opinion, there can be more going on than just how the end consumer is doing, but clearly that has been a focus for the market since the beginning of April.
John Norris (02:14):
I haven’t heard too many retail companies—and I don’t just mean stores, but mid-level product companies, consumer products generally—saying things are going gangbusters. I haven’t heard too many general-merchandise firms saying, “This is great, the consumer’s on fire, and we’re expecting a blowout.”
Sam Clement (02:41):
Touching.
John Norris (02:41):
I haven’t heard much of that. Generally, when there is guidance or market commentary, it’s “pressure on the lower-income brackets” and “expecting a muted” outlook moving forward. Occasionally you’ll see a bright spot. But in aggregate, the picture corporate earnings are giving us about the U.S. consumer is: it’s okay, feeling a little pressure. It isn’t great.
Sam Clement (03:11):
I think that’s the general sentiment. The difficulty is companies like to position themselves—what they’re saying versus what they mean—trying to hedge forward-looking statements. So you have to take everything, even down to what they say, with a grain of salt. Again, corporate earnings give us a really good look into consumers. If you’re struggling to sell to the end consumer, you’ll probably lower prices or take some action that shows up somewhere in earnings that should be—and are—audited. That’s real data. In my opinion, I haven’t seen a big slowdown or degradation in company margins.
John Norris (04:10):
I like the word choice. When push comes to shove, while it’s not perfect—and none of the government estimates are perfect—they’re generally directionally accurate. If people were to ask me in what shape the U.S. economy is, I’d say: strip out the noise about trade deficits and look at something in the GDP report that the BEA puts out every quarter—final sales to domestic purchasers.
Sam Clement (04:47):
That’s what we believe to be the core.
John Norris (04:49):
Sort of the core number. For the first quarter of this year, that number was 1.4%, and for the second quarter it was 2.4%. When you strip away the noise—inventories, changes to the trade deficit—that’s about as good an approximation of the U.S. economy as we’re going to get. Since the U.S. consumer makes up a huge percentage of the GDP equation, I’m looking at that 1.5% to 2% range. That’s what the data is telling us, and it seems about right.
Sam Clement (05:23):
Feels right.
John Norris (05:24):
It feels about right. The stores don’t seem quite as crowded as a few years ago. The restaurants don’t seem quite as crowded. The last several planes I’ve been on haven’t been quite as crowded. Everything’s still pretty good—don’t get me wrong—just not quite as good as it was. So if “good” is 3% to 4%, “not quite as good” seems to be about 2%. That’s where I am. That’s my story, and I’m sticking to it. Your thoughts?
Sam Clement (05:54):
I tend to agree. A lot of what I’m looking at—consumer, labor market (they’re tied together to some extent)—I try to focus on the reaction function. What leads to other things? Some people think a weak jobs market leads to a weak stock market; others believe stocks lead the way down, margins start to decrease, and then companies pull the workforce lever.
John Norris (06:38):
The way money keeps going into the stock market, you’d think we have a far more robust economy than my tea leaves are telling us—but that’s perhaps a podcast for another time. Another question I get: what impact are tariffs having on consumer prices, and have they caused the consumer to pull back? Right now, the data—at least how I process it—doesn’t show a significant increase in prices due to tariffs. The trailing 12-month CPI is about 2.1%; core is around 3.1%. The PCE price index, trailing 12 months, might be 2.7%. That’s higher than what the Fed would like—they’ve stated they want core PCE around 2%—but it’s not “Carter-era” inflation. It’s certainly not the 9.1% the BLS reported in 2021. If tariffs are 25%–35% on imported goods and consumer prices are going up 2.7%–2.9%, it’s hard for me to say, “Look what tariffs are doing to consumer prices,” at least not in the official data.
Sam Clement (08:09):
In my opinion, it’s a combination of carve-outs, delays, and companies getting exemptions. Also, if margins stay the same and somebody has to pay, by and large consumers have been able to handle price increases. It seems divided among the producer, the importer, and the end consumer—some combination of those. But companies, in my opinion, have largely been able to maintain margins.
John Norris (08:55):
They’ve been able to maintain margins. From what I’ve read and from companies I deal with here in town, many are absorbing costs in some form or fashion: eating them, pushing back on manufacturers overseas, or unfortunately laying some people off. Corporate America is keeping expenses down so they don’t have to push tariffs onto the end consumer, believing the end consumer won’t pay. Do you know of any sectors hurt worse than others? I’m looking at a lot and can’t see it. Yes, certain areas show prices rising more rapidly, but I don’t think beef prices, for example, are going up due to tariffs.
Sam Clement (09:45):
There’s more going on than tariffs alone for many industries. What makes it murkier is how quickly consumer demand is changing. That leaves companies behind—not because of tariffs. If the whole industry is impacted by tariffs and some are doing better, it’s hard to blame tariffs alone.
John Norris (10:15):
It’s like when a football team says, “We lost because of the weather.” The other team had to play in the same conditions.
Sam Clement (10:26):
Exactly my point. Post-COVID, we’ve seen trends in consumer demand change really quickly. Tariffs create unknowns, but changing consumer habits are also a factor.
John Norris (10:45):
Speaking of changing habits, what do you think consumers are buying? People my age—compared to you, I’m as old as Methuselah—are spending on trips and experiences. Beth and I recently took a trip to the United Kingdom. Almost everyone we know has traveled and spent a lot of money in the process, as opposed to buying extravagant “stuff.” People my age—the younger portion of baby boomers and Gen X—aren’t trying to accumulate as much stuff.
John Norris (11:51):
We’ve hit our peak earnings years, and we’ve accumulated enough. We’re not trying to buy stuff; we’re trying to get rid of it—hoping the kids will take some of it, and they don’t like our taste. We’re tending to spend more on experiences—trips, plays; believe it or not, we have a theater scene in Birmingham. That’s how we’re spending our money. What about your generation?
Sam Clement (12:19):
I’d say I agree, but I think it goes beyond generational. Post-COVID, we had a big focus on retail—you couldn’t go do anything, so you bought stuff, maybe renovated your house, bought furniture, or everything you could find on Amazon. Then came “revenge travel” and “revenge spending”—doing things you couldn’t do for a while. That change happened quickly across markets and generations. I mentioned on our podcast years ago: Ed Bastian, Delta’s CEO, said, “People aren’t in the office; they’re on my planes right now.” That stuck with me. People were doing things, not buying things.
John Norris (13:25):
It wasn’t this past summer—I think 2024, maybe 2023—I knew so many people who went to Italy.
Sam Clement (13:33):
Everyone was in Europe.
John Norris (13:34):
We—
Sam Clement (13:35):
We were in Europe. It was a joke that everybody went.
John Norris (13:37):
It seemed like we could’ve had an office meeting in Italy that summer. The dollar exchange rate isn’t great right now, but it didn’t matter. Most of my family has been somewhere this year. I may have mentioned people my age aren’t accumulating as much. When people are buying, it’s less about quantity and more about saving up to purchase something with intrinsic value—something really nice for the house—as opposed to, “I’m going to get as much as I can.”
Sam Clement (14:25):
I wonder how much of that is the pendulum swing from globalization causing, in my opinion, almost deflation in a lot of goods. Stuff became so cheap that the human reaction is: if it’s so cheap, get more of it.
John Norris (14:44):
You don’t want to lose out.
Sam Clement (14:45):
Right—“I was going to get one; it’s so cheap, I’ll get two.”
John Norris (14:50):
Do you really need that second 75-inch television?
Sam Clement (14:52):
All kinds of stuff.
John Norris (14:54):
They’re giving them away—BOGO, all kinds of promotions.
Sam Clement (14:54):
Exactly. And now I’m seeing antique stores where hot items are 18th-century French dressers or cupboards. They sell like hotcakes—tons of demand for heirloom-type stuff. Maybe that’s anecdotal, but I agree: people are valuing quality over quantity.
John Norris (15:32):
Across the spectrum of the U.S. consumer, is the focus on “need to have” or “nice to have”? I’d say there’s a huge divergence. Lower-income brackets have always focused on “need to have,” and the upper 5%–10% on “nice to have.” I’d say that gap is as wide as it’s been in my career.
Sam Clement (16:06):
I’d be curious to see what the Gini coefficient is now.
John Norris (16:09):
It’s got to be blown out. Lower-income brackets are focusing almost all their money on “need to have,” while upper-income brackets have more for “nice to have.” What tactics have you noticed businesses using to keep consumers coming back?
Sam Clement (16:34):
The biggest thing—and we’ve experienced this, and it’s only going to get better—is targeted marketing.
John Norris (16:49):
Go on.
Sam Clement (16:49):
That can mean, “We know you’ll like this,” so you see ads more often—on websites, commercials, your Instagram feed, or via influencer marketing. The amount of data out there lets companies confidently identify their market and what works. We’re still in the early innings of monetizing people’s interests. That’s what a lot of the AI revolution and data obsession is about: knowing people better.
John Norris (17:35):
You’re absolutely right. When I was growing up, Mercedes advertised during Notre Dame games and Chevrolet during Alabama games. That’s changed. The other night, I was watching baseball—can’t remember which game—and an ad for bladder-control underwear targeted to women came on. It’s a Division Series game, and I’m thinking: are that many women of a certain age watching this? They must be. No one pays that money to advertise in the Division Series unless they have data that the audience is there. Don’t you find that a little weird?
John Norris (19:04):
My first thought was, someone at Nielsen—or whichever firm does this—said, “This is when to advertise this.”
Sam Clement (19:13):
They probably pitched it, it cost X, and the company did it—unless you believe companies are doing broad advertising and not caring about ROE.
John Norris (19:29):
If anyone’s listening, the next time you watch network TV, pay attention to the ads. Someone’s done work. It’s not “blanket GM on everything” and hope something sticks. Ads are far more targeted than we realize. Having dealt with marketing and research firms, the technology they use now—tracking searches on phones and laptops, dropping polygons, geographic tracking—is nuts. You’re absolutely right about targeted marketing. Are you seeing massive discounting or BOGOs? And let’s talk about “must-haves” for the holiday shopping season.
Sam Clement (20:31):
Discounts and BOGOs are happening, but they’re targeted. Companies know why to discount certain products and not others. The other big focus—across almost every industry—is subscriptions.
John Norris (21:03):
Yes.
Sam Clement (21:04):
Beyond discounts, the broad trend is: everything is a subscription. A car wash down the road—
John Norris (21:17):
It’s so annoying. Everything is a subscription now. An individual car wash is like $23—
Sam Clement (21:24):
—or a subscription for $28.
John Norris (21:27):
And I get to come as often as I want, but they know I’m not coming more than twice a month.
Sam Clement (21:32):
Gyms, car washes, memberships for discounts at stores and restaurants—
John Norris (21:43):
It’s like store-card pitches years ago: “Want to save 10%?” Some people paid it off immediately; most forgot and rolled balances. With subscriptions, it’s similar. There’s a local car-wash company—no names—but it feels like “take me to the bank for a loan.” Everything is a subscription. On Amazon, I’m particular about some toiletries. They push subscriptions. I signed up once and got French soap every other week—spending a fortune—and gave it away until I finally canceled.
Sam Clement (22:44):
To me, that’s the biggest trend.
John Norris (22:47):
I think you’re right. Now, the holiday shopping season: you’ve got a toddler and a wife. What are the must-have gifts you’ve seen? Have you paid attention?
Sam Clement (23:07):
I haven’t paid a single ounce of attention to Christmas yet—I’m trying to get through Thanksgiving first. But I think there’s still a focus on events and activities. I’ve talked to people getting a zoo membership. That’s anecdotal, but—
John Norris (23:32):
That’s a great gift.
Sam Clement (23:33):
It is, especially if you have kids. I still think there’s a lean toward trips and events.
John Norris (23:42):
I think you’re right, at least among certain generations and income levels. I went to GoodHousekeeping.com to find some must-have gifts for this season. It has to be experiences because nothing on their list was more than $50–$60. This one struck me—I wish I had a 12-year-old. I don’t.
Sam Clement (24:19):
This is a lot.
John Norris (24:19):
I’m going to give Sam a printed page and ask him not to read the company name, but read the rest and tell us what he thinks.
Sam Clement (24:29):
Do you need a subscription for it?
John Norris (24:30):
Probably.
Sam Clement (24:34):
“Smartphone-controlled paper airplane—flies with autopilot and stabilizer.”
John Norris (24:45):
It’s a little skeleton with a motor you control with your phone that you put on a paper airplane. You can make a paper airplane and fly it in controlled fashion. It’s awesome.
Sam Clement (25:05):
It could have some nefarious purposes.
John Norris (25:06):
It reminds me of the Foghorn Leghorn skit with Miss Prissy and her son, Egghead—he created a paper airplane that shot down Foghorn Leghorn.
Sam Clement (25:20):
I have no clue what you’re talking about.
John Norris (25:22):
You don’t know who Foghorn Leghorn is?
Sam Clement (25:24):
No.
John Norris (25:26):
Okay.
Sam Clement (25:29):
Sounds familiar—maybe in a multiple choice.
John Norris (25:36):
Finally—though we’re going long here today, having a good time—what sort of impact do you think AI is going to have on the consumer?
Sam Clement (25:42):
There are a lot of things. Like the internet, it’s going to change everything. That’s the boring answer. But going back to targeted marketing, I believe that’s the big thing. It’ll change habits in travel—I’ve seen people using it to book and plan trips. It’s going to be part of everything. In the meantime, AI’s use in targeting—specific content for specific people—is how it changes the consumer here and now.
John Norris (26:18):
How can anyone disagree? Did you ever see the Tom Cruise movie “Minority Report,” set in the future?
Sam Clement (26:30):
I know what it is; I haven’t seen it.
John Norris (26:32):
He has his retinas replaced. When he walks through a store, there’s optical recognition, and all the product lines market to him directly based on his retina scan. It seemed far-fetched—technology marketing products to us directly. No guessing game. They know who I am when I walk into a store and which products I’d like based on past purchases. It won’t just be, “This demographic is watching this.” It will be: “Sam Clement has walked into Urban Outfitters; the last three things he purchased suggest he’s here for a pair of shoes.”
Sam Clement (27:33):
A real-life example: I was at Sam’s Club. You can check out with the app. I went to click checkout, and I got an alert: “Did you forget to buy diapers?” That’s where we buy our daughter’s diapers. Sure enough, I forgot. It earned them $40 more in revenue. I did need it. It was the only thing it asked me about.
John Norris (28:18):
Because of this, a prediction: traditional advertising on network television will become less and less as marketers can reach us directly through other technological and communication means. Your thoughts?
Sam Clement (28:39):
Agree—a lot more customized.
John Norris (28:41):
Alright. Thank you for listening. We always love to hear from you. If you have comments or questions, let us know. You can drop us a line at or leave us a review on the podcast outlet of your choice. If you want to read or hear more of what we think, go to oak court.com—O-A-K-W-O-R-T-H dot com. Look under the Thought Leadership tab for access and links to previous episodes of Trading Perspectives, our newsletter/blog that comes out every Monday, Common Cents, and links to our quarterly analysis, Macro & Market—which should be out in about another week or so; it’s at the printers or being formatted right now. Finally, links to good stuff from our Advisory Services Group headed up by Mac Frasier. Alright, Sam, anything else to add on this very exciting topic?
Sam Clement (29:31):
That is all I have.
John Norris (29:32):
That’s all I’ve got today, too. Y’all take care.