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One of the unique things we’re seeing is higher income people spending and recovering less quickly than lower income people: Affinity Solutions CEO

Jonathan Silver Affinity Solutions CEO joins the On the Move panel to discuss the latest retail sales increase for the month of June.

Video Transcript

JULIE HYMAN: We got retail sales data today. It came in with an increase of 7 and 1/2 percent. That's as we saw reopening around the country. Of course, we'll see if it keeps that momentum because we are seeing things now re-close. Let's get some more insight into those retail numbers. Jonathan Silver is joining us now. He is Affinity Solutions CEO. He is joining us from suburban New York.

And Affinity Solutions tracks cardholder transactions, 90 million of them. So what are you seeing, Jonathan, in your data that gives us maybe a little more granularity on the government retail sales data that we got today?

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JONATHAN SILVER: So our data, as you mentioned, comes from about 90 million credit and debit cards which tracks very closely the census statistics that came out today. Obviously we're pleased seeing the growth from May to June. But we tend to look year over year, even that was compelling. We saw 5% growth in retail sales minus food service.

Our data has the ability to go deeper though. We can look at income. We can look at political affiliation. We can look at generational differences. So one thing that we noticed, we're looking at income. There are some interesting things.

We're seeing that people at higher incomes. And I'm talking about over $100,000 a year were hit hardest as a result of COVID, meeting percentage-wise, their spend on credit and debit cards declined at a much [AUDIO OUT]

--at a much slower rate.

The challenge there is that a lot of lower income people in this recovery, in this challenged economy, what's unique about it is that lower income people are often waiters, servers, working in service establishments that depend on higher income people spending money. And so they're not getting the tips if they're a server. And they're getting furloughed if they're in service businesses. So that's one of the unique things we're seeing is higher income people recovering less quickly than lower income people.

ADAM SHAPIRO: Hi, Jonathan. I'm curious, are you able to deep dive into which income brackets might be facing default on credit cards, or is that too far deep?

JONATHAN SILVER: That's a great question. We're not seeing, from where we're sitting, not seeing evidence of significant default. But it serves to reason that if a lot of the incomes-- I think the stimulus checks helped a lot. I think you will see some defaults, in our opinion, as you head into the third and fourth quarter.

But so far, we haven't seen anything too dramatic in that area.

DAN HOWLEY: Jonathan, where are we seeing consumers spend. Is it in durable goods? What are we looking at?

JONATHAN SILVER: We kind of, as you would you would expect, look at the needs versus want, discretionary spend versus spend that's required, you know, grocery, drug. What we're seeing in general, and it's obvious it goes with the states that are opening, we're seeing some increased incremental discretionary spend in department stores and restaurants.

June, there was a bunch of states, as you all know, that had upticks, about 21 states, actually 24 states that had upticks. And then we saw a retrenchment. We saw, in those states when there started to be some cases, people pulling back, getting nervous. So May, we saw an increase. June, in those states, we saw a decrease. That's certainly one area that we've seen.

JULIE HYMAN: Jonathan, thanks for your insight here. Jonathan Silver is Affinity Solutions CEO. Appreciate it.

JONATHAN SILVER: My pleasure.