They call it the old “eyeball test” or “eye test” for short. It’s the sophisticated metric talking heads on ESPN have created to prove how Southeastern Conference (SEC) college football teams are more qualified for the playoff over teams from the Atlantic Coast Conference (ACC), Big 12 and Big 10 (B1G), even if they have 2 more losses than their counterparts. Apologies to our Gamecock and other SEC-school alumnae, but this is a thing. The eye test, invented most likely by ESPN announcer Kirk Herbstreit, goes like this: if Team A “looks” better to the qualified viewer’s discerning eye than Team B, then surely it must be better, and thus “more deserving” of a playoff spot. And that’s the end of the test. Like I said – sophisticated.
I’m thinking about that today, in part, because college football is a mere 38 days away (not that anyone’s counting, of course). But a different kind of eye test came up several times while I was away on vacation last week at the beach. First, let me say that I’ll never make the ranks of detective, so these observations about the consumer economy were almost all due to the discerning eye of my beautiful, smart, resourceful, supportive, loving (she’s going to read this) wife, Ashley. We’ll call these “sophisticated” takes based on anecdotal things we’re seeing out and about our “economic eyeball test”. It’s admittedly a very crude, but not altogether insignificant way to measure economic activity.
Observation 1 is that people will spend loads of money on vacation in this economy and will fight to get there despite all circumstances. We left to go to the beach from Winston-Salem the weekend before last after visiting relatives and navigated the Carolina highways around a tropical storm with high winds and flooding rains pushing up from Myrtle Beach into Southeastern NC. We weren’t the only ones. Ever been to Bennettsville, SC before? Me either, before last week when we diverted our course there to get around the coming storm. Ashley pointed out the never-ending snake of cars without end in sight, both going and coming back from the beach, through an empty, economically ravaged downtown completely devoid of occupied stores. The dichotomy was remarkable. The empty downtown on the coastal plain was not a surprise. The surprise was the “come hell or high water (literally in this case)” attitude of tens of thousands of vacationers in the Carolinas navigating the danger of a tropical storm, that did in fact flood towns in Southeastern NC, to get to expensive vacation destinations with clear skies and breaking waves. We’re going to have fun or die trying.
Travel Eyeball Test Analysis: The American people’s wallet capacity in the Travel and Leisure categories of spending are absolutely rock solid and this extends into what we’ve seen in trying to book our next trip, a cruise in the Spring of 2026. Have fun trying to find a cabin on a ship with a good itinerary even 9 months from now.
Observation 2 in our Economic Eye Test began with the sheer number of people blowing through $18 to $20 cocktails by the resort pool at North Myrtle Beach. Yes, those were the same people in line for the free drinks provided by the hotel at Happy Hour. But that’s not the point. The real observation is where those people were drinking those cocktails. Many of them sat with family and friends under cabanas arranged with soft cushy sofas and chairs surrounding the pools and slides. I inquired about them to an attendant, as my parents and sister were also there, and I know I must have had an audible intake of breath when I learned that they rented for $350 – a cost not for the week mind you, but for the day. On the dry-erase boards that hung from the facades of each of the 20-plus cabanas were the names of family claimants written in blue marker, many of whom Ashley noted remained listed as occupants for every day of our 6-day trip. The hotel was around $350 per night plus parking and these vacationers applied an equal priority and investment on a third home (to their vacation’s second home), a little shade by the pool. So go on and double that $2,100 stay to $4,200, plus parking and resort fees, naturally. And the real kicker, from what we saw, was that those families only spent a few hours in their cabanas during the entire week and most of the time were elsewhere, in all likelihood spending even more money at a different hotspot.
Resort Pool Eyeball Test Analysis: Times are hard. These cabanas only came with 32-inch TVs after all. No, the real observation is that not only do folks have money to travel; they have money to travel in style.
Observation 3 was made while sitting at a table at the Greenville Costco food court under an umbrella designed to block out the ever-dangerous fluorescent lights high above. I think we must have been in the VIP section as the other tables didn’t have an indoors umbrella. The total of the meal being consumed for 4 people was $14 (and yes, we only stopped at Costco to eat cheap after blowing much money at the beach). As it was late on Sunday afternoon, the store was closing and the line of carts awaiting the Receipt-Marker-Checker Guy to exit the store was very long. Ashley noticed that in at least 4 of the carts, rode none other than the Ninja SLUSHi Professional Frozen Drink Maker with a 96-oz. Capacity and 5 Preset Programs! Upon further inspection online the Slushi maker, excuse me, SLUSHi maker, retails at Costco for $342.99. Those fully-paid-for Slushi machines were only the 4 we saw during that 10-minute period. So how many more $342.99 SLUSHi makers were sold just that day here in Greenville? I wonder exactly how far down one’s priority list of things to spend money on this month is a SLUSHi maker costing several hundred dollars? Well at least 4 Upstate residents said it’s Go-Time for the slushis!! Slightly off Depression-era behavior I would say … (If one of you happened to buy one of these then please invite me over as I just have to know what the fuss is about).
Costco Eyeball Test Analysis: Retail is STRONG in certain very well-run stores like Costco and Wal-Mart, even though Walgreens, CVS and others are set to close 15,000 stores in 2025. (That’s what you get when you try to sell my Belvita Crackers for $7 a box, Walgreens).
Our overall results of our economic eyeball test over the last week or two is that the American consumer, despite all inflation challenges thrown in their paths over the last 5 years have been indefatigable and resilient. They are hard-wired to have a good time and will spend what they want when they want. Conclusion: we are neither in a recession nor even close to one. This is my stock market analysis for this week fresh off vacation, since I was watching waves, not ticker symbols. The “economic eye test” is a buying signal for me, at least with respect to certain areas of the economy.
Our WTA Investment Committee remains concerned with the long-term debt of the country and all the money printing. While interest rates may come down a tad in the months to come, we’re just not seeing the upside of some Bond ETFs moving forward and so we’ve made some moves in the Fixed Income areas of your portfolio. For many of you we’ve pivoted your portfolios to what we call our Extended Buffered ETF strategy, where we’re going to look to achieve a reasonable rate of return for you on the so-called “safer” side of your Schwab investments without incurring much market risk. That strategy looks more promising than trying to hang onto the remnants of a 40-year bull run for bonds that is way past its time and may have more downside potential than we’d like for you given the state of national debts and deficits. We ARE hanging onto bond ETF positions for you where income is the primary need such as in our Monthly Cashflow Fixed Income portfolio, so don’t expect changes there. If you need the income from those, it will continue to flow. Just keep us updated if we need to tweak the amounts you receive.
If you’d like clarification on any of that or if “the old eyeball test” is a buying signal for you as well then give us a call. Share your own observations with us and let us know how we can help you prosper or even financially plan your next vacation! If you listen to us, we’ll change your financial world …
Sincerely,
Scott Wright
The WTA Investment Committee
