taylor: i'm taylor riggs. let's take a look at how markets performed on the day. what is fascinating is we were a lot lower earlier, then the february minutes from the january meeting were released. we are tackling inflation a little bit but not too much, so we are actually a lot less lower than we were as we end the session. price higher, yield lower particularly on the front end.we are not moving at least for now according to the markets so that's a relief. we are seeing every steepening of the yield curve, and the pivot to qt.it all comes down to the strong

economic data we continue to get. strong cpi, strong tpi, and look at this. 3.8% on retail sales erase some of the losses we saw in december. we are pushing forward into a strong consumer economy. that was the markets wrap. "what'd you miss?" starts now. caroline: i'm caroline hyde. the surprise, the u.s. consumer spending surging in the start of the year for the most in 10 months. . we saw gains despite that red hot inflation. how sustainable is it and how are consumers turning to debt and credit card bills? they jumped sharply last quarter. romaine: the data has been erratic. there it was a surprise drop in retail sales. 3.8%, almost two percentage

points above what the fed was looking for. these are not adjusted for inflation, so some of these increases could be that people were paying more for things, not necessarily that they were buying more, but we did see bumps up in terms of e-commerce and people buying things online. furniture sales were through the roof. look what you get here, 3.8%. that's a big deal because we know energy prices and automobile prices had driven some of the past gains here. it would be interesting to see what happens in the months ahead because again, sustainability and the erratic nature of this data has some people concerned. taylor: let's discuss this more with adrian you, barclays senior analyst, who covers companies like nike, nordstrom and lululemon. i'm curious how you think about these retail sales. are we buying more, or are we just buying fewer goods at higher prices? what do you see in your coverage universe of this trend and the push and full of inflation on

the consumer? >> thanks so much for having me. i appreciate it. if you look at mall traffic relative to 2019, for most retailers it is flat and slightly down. it is the average unit retail, the selling price, from heavily reduced promotional activity, and clearance levels of inventory that is really driving up what we call the average unit retail. that is up anywhere from 10% to 25% vis-a-vis 2019. the great thing about this is that the consumer is absolutely willing to part with more money for the same level of goods. that is key here because that is the key to sustaining that going forward. let's not forget the scarcity of these products is cropping up the ability to sale at full price. caroline: and the supply chain headaches a lot of companies are facing, and why inventory is running thin.

our certain companies able to have the right product at the right time and right price? >> they are, but i would say even the best in the world, maggie, is having problems getting their inventory out. and frankly, the big bottleneck is what we call at the destination point. the shipping point coming out and destination coming into l.a. long beach. that has been the big bottleneck . there are still weeks of delay. these companies by six to nine months out so this supply tightness will be with us certainly through the first half of the year. cropping up though, creating scarcity and allowing price increases. romaine: do you worry about the pull forward, because people are concerned about supply chain issues, they are buying things now and afraid of inflationary pressures. do we sort of deplete the buying

power of folks, or is that maybe just a misinterpretation? >> if we were in a season, i will call it spring, 12232, and then fall. when we transition from fall to spring and spring to fall and we are seeing the kind of controlled promotional activities in early february, that is the first month of the retail fiscal quarters, it is very restrained. to the extent that we have not even gotten warm weather and late easter, that all bodes very well for demand for the retailers, for clean inventories, and for margins. taylor: are we still seeing that seasonality you mentioned? i think it was less christmas we ordered all of our gifts in

october, and the gifts came in light because we all frontloaded. do you see this resuming abnormal behavior? >> that behavior happens once a year, and it happens at holidays. you are 100% correct. . the fact that we started in mid-october does not mean you are buying more gifts. that type of phenomenon does not happen as much throughout the rest of the year with that hard and stop -- end stop. we actually see people buying four occasions. we still have a huge reopening and a return to service, locations, going out, travel. that is a huge impetus for product oriented. i want to say, 49% of households in the u.s. are over 75,000 dollars in income but represent 64% of consumption. keep that in mind. caroline: great stat. i'm interested as where we shift

towards wondering how sustainable this is, as we start to see stimulus is run out, child tax credit running out. will we see that we will not purchase quite so much on the luxury front, or maybe it will be luxury that does well, but then cheaper price points do well? is it going to be the middle that does well? >> it is a tale of two ends of the spectrum. high-end, over $75,000 household income, we believe this is a stock breakers market. who will be able to pass through those price points, hold them there, and keep the extra margins when they reverse in the first half of 2023? nike, the people with brands, certainly luxury. this morning lvmh raised prices about 10% overnight. we thought that was a huge move on price point.

the luxury guys are up about anywhere between 8% and 15% in the past two years as well. that's where there's no price resistance whatsoever. under $75,000. romaine: great stuff. barclays senior analyst helping us kick off the discussion, focusing on retail sales. eight of the 13 categories in the report all rows, but it's kind of awkward looking data. we want to -- backward looking data. our next guest is the ceo of the market research platform cartify. we will get is insight into why spending is holding up, even amid some of these rising prices. taylor: and is it self-fulfilling? like all this inflationary stuff, we are afraid prices are rising tomorrow, so we are buying it today and prices are going up. so it is a self-fulfilling

prophecy. romaine: how much did you spend on valentine's day? taylor: gosh, i don't do valentine's day. romaine: it's ok brian. we got your back. [laughter] we will be back in a moment. this is bloomberg. ♪

>> consumers have become less and less easy with what will happen in personal cash flow as rates go up and various news cycles tell you all about scary things like hyperinflation. we are in the business of providing clarity and transparency to the consumer. we have seen incredible demands at the beginning of the pandemic as consumers were feeling

confused and willing -- not knowing how to make ends meet. caroline: of course, the a firm ceo max alexion speaking earlier on bloomberg about payment plans. stocks actually pretty much under pressure. but we are starting to see it humbling in the last five sessions. the reason is, why? what are we now seeing that we did not see before? romaine: there will be a lot of people parsing of firm and its issues, but i think that by now, pay later model, the idea that it gave a lot of people the power to buy things they maybe would not have had, if those plans are not there or if they pull back at all, if there's a little more strict credit requirements, you wonder how that affects things. taylor:taylor: i will never

forget the day we watched shares of peloton slide, and it was because analysts were watching a firm data. he did say that there had been always concerns about delinquency rates or default rates. i think he said almost on a daily basis, they tweak their model to make sure they are comfortable at all times with the consumers to whom they are lending and they evaluate it. caroline: i wonder how much the analysts will do it themselves and in terms of payment plans per let's look at the data when it comes to the flows across the board. derrick fung does that, for us the ceo of the market research firm cardify to track u.s. consumer spending. what do you make of the stability, the sustainability of everyone's desire to go out there and spend? how much are we turning our attention to by now, pay later, or can we just afforded?

>> it is great to be back. i would say the numbers show this pent up consumer demand israel. -- is real. if you look back a year ago versus now, definitely a few categories that are seeing bigger increases than others. travel is a big one. i think a lot of consumers want to get back out there and shop and travel, and with more and more lockdown restrictions being removed, it's a big one. a lot of the consumers, predominantly millennial and generation z, they want to take their dream vacation this year. the challenge though we see with what is going to happen in this space is definitely a lot of consumers racking up a lot of that to pay for things -- debt to pay for things in the holiday. by now, pay later actually does not affect credit score.even though you are maxed out on cards, you can deal -- still get a low rate.

it is hard to predict what will happen. one of the challenges of the space, as soon as rates continue to go up, will the whole space start to get regulated? even though the space is very transparent, 1% is big when you are paying 0% on some of the purchases you have made on by now, pay later. taylor: how are you then gauging the health of the consumer? it is hard to see why not, rates are at zero at least for a month or so, why not do it out on credit? what does that mean about the health of the consumer that we are still financing all this stuff, even after all the stimulus checks? >> even though rates are going up, i think savings, if you look at savings accounts, they are still quite healthy. that's what we are seeing off of debit card data. i do think there is a bit of a self-fulfilling thing happening. i know romaine mentioned before

the break, something we are seeing is a lot of furniture purchases. early in covid, that was a big one. we are seeing that again. i wonder if the consumer, especially younger consumers who are constantly told you may never be able to afford a house, and with them knowing rates are going to go up, are they going out and biting the bullet and buying new things? maybe that's why furniture prices and home improvement is going up, based on the last month of data. i think there's a bit of this self-fulfilling thing happening. i worry a bit around the consumer and their financial health, are they taking on too much debt? that will be something very interesting to watch. romaine: what aren't people spending on? when you look at your data, where are we seeing the biggest drops? >> i would say things that they bought too much of and enough already during the lockdown. i say that clothing and apparel

is a big one. i say beauty and makeup, although it is usually pretty strong relatively, i think people have bought enough makeup during the lockdowns and they are just excited to go out and spend on experiences. experiences continues to outweigh products. coachella, one of the hottest music festivals, i believe yesterday announced no more masks, no -- romaine: you need makeup for coachella. a little lip gloss. taylor: and no more masks at disneyland. >> yes. it's all about the experiences we think consumers will be different in how they travel. those who are not comfortable making plans will still do vacations. airbnb had greater earnings yesterday. i think consumers, whether they hop on a plane or not, want to travel. caroline: to that point, you are in toronto where perhaps it is a

little easier to move around. is it domestic spending we are still anticipating, or are north americans spending on international? we had a high end luxury hotel group saying at the moment it is all about spending money at home. >> i think that's fair. i think with gas prices though, it will be interesting to see how consumers think about flying versus staying at home. luxury continues to be a strong category. the other one we mentioned is at leisure, so names like nike, lululemon. we think that will continue to be very strong categories for the consumer. we think the return to work will be a different type of work where the younger consumers especially, a few days in office or at home, why not by more athletes are to work from home in a comfortable way? taylor: derrick fung, we

appreciate it, ceo of cardify. i'm still waiting on romaine to get those tights, as he calls them. romaine: those things are expensive. have you ever seen those? taylor: you were talking about buying a virgin galactic flight. romaine: that's experiential. i would spend money on that. caroline: he's already bought all of his tights. . romaine: exactly. taylor: coming up, americans are returning to the old habits with credit card spending back up. we will discuss what is fueling that move. this is bloomberg. ♪

caroline: today's triple take. focusing on consumer spending

after today's a retail sales numbers. while demand is holding up against inflation data, how long and how sustainable is it? where is the money coming from? romaine: it's coming from credit. this is the number of u.s. credit cards and the amount people are swiping those. it was the biggest we've seen going back in 22 years. it talks about the money people spend and how the pandemic spending was because of actual cash. savings, fiscal stimulus. we are seeing a shift where people are going back to credit, whether it's credit cards, auto loans, mortgages in some cases. but at the end of the day, more debt. taylor: dare i say it, unlimited qe has that effect. and thankfully what is still happening is michael mckee, who knows all about this, and -- our very own economics policy correspondent. explain to me, how is it that

prices rise and consumers by even more? >> a lot of the data is fourth-quarter when the inflation rate was not quite as bad as it is now. so americans were less concerned about inflation when you were talking about going out and holiday shopping in october and november. this comes from the new york fed does a quarterly survey. you are right. a lot of people charging the retail sales were expected to drop off a little bit, but today they didn't and it shows americans are using whatever means they have to go out and spend money, not just on the government checks they've got, but on credit as well. caroline: does that ring alarm bells in any way? >> it certainly does because this is an environment of rising interest rates. we've already seen markets rate go up. the fed hasn't even started yet. mortgage rates are up by almost

a percentage point. very few people have a floating-rate loan, but certainly on credit cards, you will see more money on a monthly basis on purchases you have already made. you can see we have an enormous amount of mortgage debt because everyone went out and bought houses and moved out to the country. a lot of people bought cars. cars do often have floating debt. or people come out with longer-term loans which will come back to bite some people. caroline: hopping on zoom to tell us whether it's a worry. romaine: in all seriousness, i see the data, but i also see historical data. the percentage of gdp and economic activity numbers is no idea where was in the collapse of the global financial crisis. i guess it gives you some sense of maybe it is not gloom and

doom. taylor: we have to go back to the 9:00 a.m. hour, bob michele addressed this where you think people are borrowing, but are actually flush with cash. romaine: and i wonder what the demographic disparities are. it's always hard to know. in aggregate, there are people who really have had the means to do this all through the pandemic and others who have not. caroline: precisely. and when you cut off the child tax credit, what does that mean for the lower socioeconomic spending? that's what our guest was saying from barclays. luxury will be just fine. maybe the lower end will be ok. it is the middle. if you are not charging the right price at the right time, you will be hurting because you don't have brand power. romaine: have you seen the price of a chanel bag? caroline: probably not. romaine: i think taylor has. [laughter] taylor: no.

is that what you got your wife for valentine's day? romaine: are you crazy? taylor: it is up 70% year-over-year. romaine: i think we are out of time now. so. taylor: unbelievable. caroline: all about expenses and leather bags. that's it for "what'd you miss?" "bloomberg technology" is up next. this is bloomberg. ♪

announcer: from the heart of where innovation, money and power collide, in silicon valley and beyond, this is "bloomberg technology" with emily chang. emily: i'm emily chang in san francisco and this is "bloomberg technology." coming up in the next hour, shop a fight is sinking. the stock has its biggest drop in almost two years despite a better-than-expected earnings report. the concn