Holiday Cheer Comes at a Premium in 2025

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2:52Yeah. The economic data that we are or are not getting. Well, we're going to get a read on inflation on Thursday, right? And so one of the ways we have some fun every holiday season is figuring out what the cost of the 12 days of Christmas are. Yeah. So the reason we're talking about this is because it's just one read on inflation. Another read is what Carol mentioned, PNC's Christmas Price Index. The bank has been doing for 42 years. We've got Amanda Agati with us, Chief Investment Officer at PNC Asset Management Group. She joins us from Philadelphia. So, Amanda, is it more expensive than it was last year?

3:23Let's like, what's the headline here? It's almost always more expensive. Thanks guys so much for having me on a year over year basis. The Christmas price index is up 4.5%. So we are handily outpacing the BLS CPI version. So it's going to cost true love this holiday season. All right. So wait, what's costing us more? Well, sadly, I mean, we talk about this every year, but sadly, my all time favorite gift is actually the biggest mover by far. So five golden rings. Do I have to elaborate on that? Gold went up. Gold was an outperforming asset. Nobody asked for five crypto rings, five Bitcoin rings.

4:06No, they didn't. Although they would have done okay for at least part of the year. But the five golden rings weren't up as much as the price of gold itself. Still up a very hot 32 and a half percent. It's really very much a reflection of what we think is a little bit of a margin squeeze, right? late innings of the cycle, a still positive growth story for the economy, but margin pressures are building. And so we are seeing that in the price of the golden rings being passed through, or maybe not being quite fully passed through this holiday season. Okay. So those are the golden rings. What else was, what's the second most expense, not most expensive, but the thing that went up the second most?

4:44The pear tree. Oh, really? Why is that? Which, which nobody wants a partridge. Okay. So So the partridge was flat on a year over year basis. That's not a gift that keeps on giving. The pear tree is. It's an awful lot of work. But the pear tree is what we refer to as a proxy for housing costs. And so when we think about housing and the housing market in this country, clearly running pretty hot on a relative basis year over year affordability getting kind of challenged. Right. Even though mortgage rates have come down some, it hasn't made a huge difference in terms of supply and demand and inventory levels.

5:25We're still very short housing stock. So Pear Tree also running hot on a year-over-year basis. Also performers, right? I mean, the cost of labor, I guess you could kind of say? Well, sometimes it is the cost of labor. Sometimes it's contractual escalators. This year, the big one is the 10 Lords of Leaping. And I've been having fun all year talking about this one because Oasis has been the hottest concert ticket in town. You could refer to them as the Lords of Rock, perhaps. But so this is the real world concert tickets, experiences, demand driving up those 10 Lords. Yeah. How do you measure that just on a base?

6:05Like, are you just looking at Oasis or are you looking at everybody? No, I'm teasing. I just it's fun to try because I mean, I went to an Oasis concert. at two Oasis concerts. No, one of them, where did you go? Talia, our producers, yeah, Scotland in LA. She traveled all the way for Oasis from New York. So there's some serious fans out there. Yeah, absolutely, as am I. But I don't have 10 lords laying around here. So we do our best to try and talk to dance companies and theater companies on a year-over-year basis. There's a method to this scientific madness. And so I'm just trying to make it a little bit relatable The lords of all the performers were the biggest standout on a year-over-year basis.

6:51So naturally, it must be the Oasis Effect. If only I had 10 lords a-leaping just hanging around somewhere. Just kidding. Just kidding. Hey, what stayed the same or did anything go down? Oh, almost nothing goes down. Let's get real here. I would love to say, aside from the pandemic when we had to shut the lights off on a lot of the performers and experiences just as a function of what was happening in the real world economy. A number of gifts did stay flat on a year over year basis. So two turtle doves, three French hens, four calling birds, the seven swans, the eight maids. So there was a decent amount of stability on a year over year basis, but some pretty significant moves in the top three or four on a year over year basis.

7:36How does this I mean, look, we're you know, this is fun and we do this because it's fun, but it also does give us an opportunity to talk about the real world inflation that we're seeing and also real world asset price movements, Amanda. As Carol mentioned, we're getting some data this week, partial data when it comes to CPI. Some of it will be incomplete. Some of it will be old, of course. But overall, the index, it moved more than headline figures when it comes to CPI. It sure did. And that's not always the case. But you have to think about the gifts in the Christmas price index as a very specialty gift basket of goods and services.

8:15So it's not really a reflection of the broad economy and the U.S. consumer in total. It tends to lean higher end in terms of the spectrum there. But I think it is a good indicator for what some of the pricing trends may look like this holiday season. So the consumer is definitely hanging in there on a relative basis. We definitely see consumers continuing to spend and retail sales data continues to look solid. Holiday shopping looks good, but it's definitely going to cost consumers this holiday season. Yeah. What's the next? I'm curious about what data points you're kind of keeping an eye on to get an idea of what happens maybe in the first half of 2026, or is it too soon to kind of make a bet on anything we see over the next couple of weeks?

9:02Well, I don't know if it's too soon necessarily to bet on. And I think the challenge is that some of the data is stale. So it's hard to extrapolate a trend from data points that are old or maybe incomplete. So as it relates to consumer health and where we're obviously focused on how the holiday shopping season plays out, retail sales data, savings rates, even just consumer sentiment, there's a number of other components and indicators that we can use to gauge the success of this holiday season and perhaps even the market's path forward in the new year. So good shape? We're in good shape? Very briefly?

9:41I think we're in good shape. Okay. Yeah. Unless you're buying five golden rings or you're getting 10 Lords a-leaping or 11 Pipers. Is Oasis still touring? Yeah, the True Love might not be in good shape, but the rest of us are in good shape. You're in good shape unless you're looking for Oasis tickets because apparently Tali tells me they're not touring anymore. So that's it.

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