McDonalds CEO: Americans SKIPPING BREAKFAST As They Go BROKE

Turning now to the economy as we said into where we can actually look to some truth Unfortunately, it comes from the CEO of McDonald's who shockingly actually dropped some truth bombs on CNBC About how divided the country is on whether you make over a hundred thousand dollars or not

Let's take a listen part of what we also saw was that Particularly with middle and lower income consumers. They're feeling under a lot of pressure But he said I think there's a lot of you of commentary about what's the state of the economy, how's it doing? And what we see is it's really kind of a two tier economy. If you're upper income earning over one hundred thousand dollars, things are good. Stock markets are near all time highs. You're feeling quite confident about things, you're seeing international travel,

all those barometers of upper income consumers are doing quite well. What we see with middle and lower income consumers is actually a different story. It's that consumers are under a lot of pressure in our industry. Traffic for lower income consumers is down double digits. And it's because people are either choosing to skip a meal, so we're seeing breakfast, people are actually skipping breakfast,

or they're choosing to just eat at home. And so for our business, which has a significant group of consumers which are in that middle and lower income, we needed to step in with something like what we're doing here.

Listen to the CEO of McDonald's, people are skipping breakfast, stuff is stupid. Now I will say on McDonald's, it's still outrageously expensive compared to where it used to be. I don't eat McDonald's maybe more than

two or three times a year. My wife gets hungry for it. She's nursing, whatever. She gets what she wants. So I go to McDonald's. The McGriddle, it costs me $9. And I tweeted about that, people made fun of me because apparently I don't use the app. No, I'm not degenerate enough to have the McDonald's app

or to be knowledgeable enough about set deals. But in my head, as a child of the 90s, you're on a road trip and you roll up to McDonald's, how much do you think that should cost? Couple bucks, you know, buck 99? And yet it's not just the price,

in lower income consumers being able to go out to eat and people are skipping breakfast. Now, I think that's, hopefully, they're getting enough to eat elsewhere and are trying to eat at home, but the totality of it is that, yeah,

it might be marginally cheaper on a percent basis to eat at home, but it's still really expensive to eat at home. If you're talking about a cup of coffee, we've talked here about coffee futures, Folgers and more has actually exploded in price. If even if you look at the basic necessities of goods,

meat in particular, protein, the price is just astounding. You can still eat cheap if you want to, but it takes a lot more effort than it used to in the past. So if you put that together, I think here is where you should listen to the CEO of McDonald's or the CEO of Walmart or these other people who have to cater to all of these customers.

And now McDonald's is scrambling to try and bring back below $5 meals and more, because they can see the consumer cannot afford it.

That's the real traffic. Yeah, I mean, down double digits, he says, traffic from lower income consumers. I mean, that is a very significant sign. And it's not just that the prices are high, it's also that the wages are not keeping up. We covered previously, I mean, I think the two-tier economy comment is the perfect way to think about it. You've got the stock market that just keeps going up and up and up, seemingly totally

divorced. up, seemingly totally divorced, and we'll talk more about what's going on there from the actual real economy, what people deal with trying to make ends meet on a day-to-day basis. And meanwhile, especially lower quintile wages are not keeping pace with inflation. So people are struggling. They're going into deeper and deeper debt. They are very pessimistic about the future.

They are holding back on any purchases that they can. They're apparently skipping breakfast so that they can make it all work in their budget. So these are dire indications of where the economy is headed right now.

Absolutely. And there is some really troubling stuff behind the scenes. And I've talked about this in particular with the stocks. I was like, man, I just don't get how with inflation, with reduction in consumer spending,

tariffs,

how can the market continue to go up? Well, now we have a little bit more of the story. Let's put this up here on the screen. Fantastic piece by the Wall Street Journal. Behind this season's bumper earnings, job cuts, price hikes, glum workers.

Quote, consumer spending is not driving company profits as much as reducing expenses, improving efficiency, that could be a problem. They say American companies are once again, beating profit expectations, but they're not doing it by banking on blockbuster consumer spending.

Instead, the latest batch of quarterly earnings gets a lift from managers who are squeezing out costs, boosting productivity, turning to new technologies, all of whom who say they're holding down hiring, often while finding new ways to get employees to work more efficiently, aka work more, and are raising prices when they can. The processes are quote, human light now. That is from one chief financial officer last month telling investors about the initiative that includes automation

upgrades, global logistics, say, higher profit margins, despite a nearly 8% drop in revenue, even though there is a prolonged freight recession. How do you do that? You raise your prices. And so, yeah, the companies are doing fine. The investors in the stocks are doing great

because that's what they demand. The number has to go up. It literally must. It's an American contract. It's like baked into our blood at this point. But what does it mean for all of you? You're paying more.

You are working more hours for less pay. You are potentially not going to get a raise. You may even get a price cut, and then you'd be lucky to actually work, you know, and continue in your job. Put that together, and it just makes a lot more sense

about how exactly the McDonald's CEO with a straight face can talk about, oh, well, we have all of this traffic down, et cetera, and all of that. But then if you look at the way that they continue to juice their profit,

it will be the $5 stuff and maintaining sales there, while also, I guess, taking advantage of idiots like me who apparently roll up to the window and pay $9.

Pay full price. Yeah, pay full price. Yeah, pay for a McGriddle. Don't download that. Yeah. Well, yeah. I mean, there's a lot that's going on in this article. I mean, first of all, AI has got to be a part of this as companies are increasingly trying to,

instead of hiring when we're talking about white collar workforces hiring those new college grads, they'll use AI and force their existing workforce to work more, to avoid building out their workforce and to save costs that way.

You have them, what's called taking price. So using the excuse of tariffs, inflation, and also genuinely facing higher costs in certain regards. They're using that to hike prices even beyond what is required. And then the other thing they talk about in

here is the financial engineering that's going on too. So share buybacks they say have helped put a shine on profits reducing the number of shares outstanding increases companies earnings per share numbers mechanically regardless of operating results. Overall LSEG data indicates that repurchases added about 1.3% points to S&P 500's gains in the second quarter. So some of this is

just, you know, financial engineering, basically like smoke and mirrors sort of accounting tricks to get things to look better than they actually are. So that's

a piece of it as well. But if you look through this article, they have a chart in there that's pretty stunning, where they look at consumer spending, consumer purchases, and then they take out inflation, they take out the price increases.

And the line, if you don't take them out, then the line of consumer spending, oh, it's going up and up and people must be doing okay. If you take that out, it's flat since 2021. So, I mean, that tells you a lot right there about how fake a lot of the profits

that are being generated here by these companies and how little bearing they have on what is actually going on with your average consumer out there.

Yeah, and again, this is the Biden story. Everyone understood that under Biden.

Yeah, that's right.

Yeah, the S&P was up by like 60% over the entire course. Were you 60% better off? If you were invested, yeah. If you were buying stuff, no. If you're buying steak at Costco, yeah, good luck. To go ahead, and what a lot of people have done,

if you really wanna feel truly crazy, go into your Amazon cart and scroll all the way back to 2020 and go look at what you were paying for basics and then compare it to today. You can do that with Walmart, if you use Walmart or any of these other places.

You can even look at your credit card bill broadly and look at, I use like tracking, I know exactly how much I pay for like every, at the grocery store, for example. You can compare based on five years ago to today and just general keep in mind,

it is astounding. Sometimes it's like 40 or 50% higher, depending on the number of goods. You're also showing, stuff is showing up in all kinds of the wrong places. So both the New York Times and the Wall Street Journal just wrote stories about how black Americans in particular

seem to be struggling right now. Let's put this up here on the screen. Both of them, what they say on the New York Times side is that if you look at this, it's largely a cuts to federal agencies. And that's also an important part of the story because the federal government is the largest employer

in the United States. And they said that this is one of the most staggering losses of employment that black women have ever seen in our current economy. On the Wall Street Journal side, they say unemployment may remain historically low, but unemployment for black Americans is some 7.2%.

Probably, again, attributable, it seems, to like federal agencies. But the point just broadly is for Trump, one of the things that he could hang his hat on when he got elected was what? Was, oh, I got historic margins with black people.

I got historic margins with Hispanic people. And you know, if you talk to a lot of those guys, or gals, guys and in some cases gals, what did they say that they voted for Trump on? The economy. They were fed up with Biden, and they didn't feel like Kamala

was gonna do anything about it. So, look, pocketbook and all that, sometimes it's number one, not always, but I do think it can be very disillusioning, broadly, when you look at all that. And the general experience of being an American consumer today, in my opinion, is hellish.

Like, it's just deeply expensive, everything is pay for play, no matter what.

Yeah, you feel exploited at every time.

You really are. I mean, it's like, you go out to a restaurant, I don't drink alcohol, you go out to a restaurant, and it's not even particularly good, and it's like 60, $70, and you're like, what am I paying for? Like, again, in my head, it should be 35. Should have just stayed at home, you know? Same with the drive-thru, just everything.

Apparently, you don't Disney World, I talked about this. You go there, they charge you at every step.

All the subscriptions, like, now, and you want to watch all the games. Good luck. Yeah, you have to buy like freaking seven different streaming packages in order to pull it off. So like this deal we thought we were getting with the cord cutting and cable going away, now we're just getting screwed. Now every company out there can nickel and dime you or much more than that, frankly, to death.

So yeah, it just, it feels, the level of sort of pillaging and exploitation has been through the roof. It's been absolutely insane. And you know, just to go back to what we're saying about black workers, black workers are frequently, the reason it's an important statistic obviously is because we want people to have jobs.

They also tend to be canary in the coal mine for the economy because historically, you know, unfortunately you have black people higher represented in low wage, lower skill employment. And so you have that dynamic. And then you also have the American government, the federal government, has been, you know, helped to build out the American black middle class.

And that is nowhere is more evident than in and around D.C. And so when you have Doge coming in and just wantonly slashing random government positions — not saving any money money by the way, just making everything worse and kicking people out of a job. You can see the effects of that showing up

in the black unemployment rate. And I'm sure that is especially pronounced right here in this region.

Absolutely. You know, to your point, I don't know, do you know what NFL red zone is? I know that a lot of my friends are not taking this well. Well, anyway, I'm sure a lot of our bro audience does. Now, I think you pay for it. It's like to be able to watch all the games or something, whatever.

But the point, now they're gonna have commercials. So you pay for it and you have to watch commercials. That's how everything works now. Everything, or, you know, it's like Hulu. to watch with Noah. 14.99 for a show that you might watch once a year? And then, oh, you gotta have Netflix, too. And then, oh, you have to have Disney Plus.

Just had a kid, apparently gotta have Disney Plus. Well, if you're gonna have Disney Plus, you might as well have the Disney Plus version with no ads because then the kids will get angry. It never ends. It's everything.

Everything is subscription. Everything is pay for play. And even what you're paying for is not even particularly good.

It's like-

It's like video games, it's the same thing.

I know, I've heard that.

It's like, you know, you may pay on the front end or you may not pay on the front end, you know, to download this game. But then if you wanna do this thing in the game or you wanna rise to get around. I think it's how, again, I don't know. I mean, it varies per game.

But if you are willing to shell out the dollars, then you're going to advance more in the game and participate in the full experience or whatever. It's, you know, I mean, it's just at every turn. And not to be all like back in my day, you bought the game and that was it. That was the end of the story. Well, they could never have envisioned.

They would have done it if they could have. They just didn't have the ability to do so. And to milk people for as much money as possible. So I don't know. I really, sometimes when I look at the average prices and then I look at the average income,

I do not understand how people make it at all. Like period. Just the monthly nut, the absolute basics. I'm like, do you have any money left at all? And then no, you know, you look at the credit card numbers and all that, I'm like, yeah, that's the only way that any of it makes sense.

By the way, some breaking news just came across the wire. U.S. companies have announced just 1,400 new jobs in August. That's the lowest for the month since 2000 in line. Layoff surging to 39% for 85,000. These are ADP payroll numbers. This is from First Walk. Literally just came out as of this.

1400?

That's what they said, yeah. So I mean, I'm making sure. Yeah, that's the number from ADP.

When do we get the government jobs report tomorrow? I think they're separate, I'm not sure. They are separate, but it comes out on Friday, so we'll probably get that one. I think it's the first Friday of the month, so we'll probably get that tomorrow.

Wow.

ADP numbers.

Yep.

While you're looking at that, put the next element up, guys. At least the tariffs are going well, or restoring our manufacturing glory here. Oh, wait, actually, manufacturing contracts dropped for six months in a row. So and that's a big part of the story, too, here is, you know, Trump was talking ironically about how the court decisions with regard to tariffs were creating uncertainty.

It's like your whole thing is complete insanity and chaos. What are we talking about here? There's no ability for anyone to plan. No company would want to hire into these circuits. No company would want to invest, build out big manufacturing plants in this environment. Because you don't know if the tariffs are on, if they're off. They obviously used, you know, very likely it's going to be struck down, the authority that

they use to levy these tariffs. They're very likely to be ultimately struck down, at least some broad swath of them. And so that has also raised prices for consumers, made business owners much more uncertain about what the future holds, and created another massive chill on the economy that is filtering through as we speak.

Yeah, by the way, it was a misprint. It's 54,000 jobs.

Sorry about that.

I apologize. Holy cow.

All right, still not good, but- It's 54,000 jobs. Sorry about that. I apologize. 54,000 according to ADP.

Better than 1,400.

But below the consensus forecast of 75,000. See, this is why Nasha believe everything you read on the internet. You gotta go and you read it.

54,000 though?

What's CNBC doing there?

54,000 though is still not good.

Anyway, so 54,000 jobless claims increased to 237,000, up from 8,000 from the prior week. And previous estimates, job openings, said it was one of the worst levels for job openings in July since 2020.

So there you go. That's what the numbers. Well, and let's put this last chart up on the screen because that underscores the point. We're now at a place for the first time in a long time where you have more job seekers than you have job openings. So, you can see that that red line,

those are the unemployed looking for jobs, and there are now officially too few job openings to go around. This was according to BLS data, so government data, and this was compiled by Steve Ratner and posted online.

So, that's also a very significant data point in terms of the trajectory of the economy.

Yep, absolutely. So you can see all this stuff together. I don't know, it's not good. I always think it's got to end, but it actually doesn't. That's the, I, that's the one thing where these people are somehow smarter than me.

They can always figure out how to massage it, buy back stock, whatever. They never, like the bubble, everyone always is like, there's a bubble that's gonna happen. And it just never stops. It's like they endlessly are able to figure it out. The really crazy part too is people just take it. They just keep paying and paying and paying.

That's why I keep meaning about your monthly bills. I'm like, at what point do you're just like, no, we're not really don't know. People are conditioned to think of it as a personal failing

if they're not able to make it, rather than, I really think that that's part of the perniciousness of some of the American dream ideologies. Like, if you work hard and you play by the rules, you can make it. And there have been studies about that,

because you have that so deeply culturally enmeshed, people are much more likely to blame themselves if they're struggling versus looking at the system saying, okay, I need to protest against this, I need to vote this person out of office, versus other countries. The comparison I saw specifically

was the American working class like in Youngstown versus the British working class in the London suburbs. Interesting. And yeah, and so, I mean, it's a real phenomenon as people turn inward and they blame themselves. They think that it's a moral failing

if they're struggling in the economy.

It can be both. Like some of it can be your fault, but a lot of it can, I mean, you don't.

When you look across the country

and you see these trends. You don't say housing, I mean, this is why we were talking about the family. Yeah, the housing thing. period, like you're literally at the mercy of the gods in Washington as to whether your mortgage was at 3% or at 7%. Like you have no say on that whatsoever.

So like, yeah, that's not your fault. You don't set the price of meat. Like you don't set the price of any of this. I guess all you can really control is your job, but you know, within this, and you look at the overall outpacing

in terms of inflation for necessities and particularly, especially anything that's gonna better yourself, like education or any of the other things, compared to the amount of wage inflation, it's just devastating.

So I don't know. Tucker said people should stop paying their credit card bills.

Maybe we should, maybe we should.

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