Two big trends to watch closely in the months ahead: Morning Brief

Yahoo Finance’s Myles Udland, Brian Sozzi, and Julie Hyman discuss eye-popping data in the coming months amid economic recovery.

Video transcript

MYLES UDLAND: We begin this hour with the latest Yahoo Finance morning brief. And looking at a couple of charts that come to us courtesy of the team over at Bank of America Global Research, they, of course, like JP Morgan, kind of bring together all of the car data that they have within their system. And take a look at what they think the con-- what they know, I should say, the consumer is doing, and therefore what we might see in some official data. Next week, we are set to get the March reading on retail sales. B of A right now looking for an 11.1% increase in a month on month sales based on their data.

But in the brief today, we looked at a couple of specific sectors of the economy and how spending has changed, both compared to last year and over the last two years. The first is airlines, where we have seen spending, as you would expect, up several hundred percentage points, literally off the chart here you can see compared to last year. But notably, last year at this time, airline spending was down more than 100%.

How is that even possible, you might ask. Well, not only was no one booking any airline travel, refunds were outpacing any new money that was being spent on airlines. Airbnb actually had a similar situation for a couple of weeks really right in the teeth of the pandemic. And so, that's why the one-year number has been so flat, about several hundred percent. But as we see in the light blue line here, over the last two years, airline spending is still negative. And so we're still below that pre-pandemic trend. And really how quickly we get back there, if indeed, we get back here, I think will be a very simple and clean way to gauge the reopening.

Another one of the charts in this presentation that caught my attention is what's happening at home furnishing stores. We saw, again, because of the distortion, the distorted effects of COVID, you see the huge decline over on the left-hand side as the pandemic hit, but then as we know, people started investing in their homes, several percentage points higher right now compared to a year ago. But the light blue line shows us that over the last two years, home furnishing spending is still materially higher.

And I'm watching this data, guys, as an indication of where consumers think their life is headed with respect to hybrid work situations. Are schools going to reopen? Do they want to move? Because, obviously, you're spending more on a home furnishing-- on home furnishings when you are moving, rather than when you are staying in the same home. And I think that if we see these numbers start to normalize, it's likely going to be reflected maybe in a pickup in airline spending, pickup in restaurant spending, but, to me, just a broad indicator of how, quote unquote, "normal" our lives are. And by that, I mean, how much do they resemble 2018 and 2019.

BRIAN SOZZI: Myles, you write in the newsletter a good bit about two-year stack analysis. What is that?

MYLES UDLAND: Yeah, I mean, that's basically just, on average-- or compared to what the number was two years ago, what, on average, has the two years since spending been compared to that baseline. So that's essentially the best that economists can do right now to give us a picture of what is happening in the economy. Every piece of data that we're looking at today is just incredibly, incredibly skewed. Incredibly warped, I guess, is the way to say it. Because things fell 50%, 60%, 80%. And now it looks like things are up five, six, seven times from that level.

So if you take those two spendings together, compare them to what was happening in 2019, you get your two-year stack. So, again, that's why it's notable that home furnishing is still up on the order of 40% or 50%, compared to where it was in 2019, and notable that airline spending remains lower against that kind of baseline.