America's richest people are expecting the worst
Main page Economics

Looking at this quarter's earnings calls of the biggest American companies, it seems like CEOs are not looking that positively towards the future.

Many of them have spoken of a rising feeling of unrest among the customers that leaves a dark trace on the biggest consumer-focused companies.

“I think, generally, there’s just a broader level of uncertainty in consumers’ minds at the moment, both trying to gauge their financial security going forward, you know, whether through elections or through global events — people are slightly mindful of an unsettled world”, said Stephen Easterbrook, McDonald’s CEO on the company's quarterly call.

Starbucks' Howard Schultz (ETR: SRB) also expressed his concerns of consumers' mood and claimed that it is affecting the company's sales. He went as far as saying that this may impact "every consumer brand" in the U.S.

“This is quite unusual. It’s unsettling. It’s unnerving, and, as a result of that, it requires an approach that is quite different than anything we’ve done before”, Schultz said.

Goldman Sachs' (ETR: GOS) analysts have investigated the second quarter earnings calls of the largest businesses and identified the state of consumer health this quarter. They described today's consumer as being financially healthy but wary of spending money due to political and social uncertainty around the globe.

MarketWatch says that American retailers and restaurant chains are anxious about the impact of the U.S. presidential elections and such international events as Turkey's attempted coup as well as frequent terrorist attacks around Europe on consumers' financial health.

Brexit was also among the key topics of the quarterly calls. The largest companies fear the state of uncertainty caused by prolonged negotiations of Brexit terms that may worsen customers' unrest even more.

Billionaires are stockpiling cash

What is more, it's not only consumers who are reconsidering their finances. The world's richest people have shown the highest amount of net worth kept in cash since 2010, what can be a sign of concern for all of us.

This year's Wealth-X Billionaire Census analyzed 2,473 billionaires and revealed that 22,2% of their net worth is kept in cash, adding up to a total of $1.7 trillion. The billionaires are sensing the growing economical risks in the world and the instability of stocks and digital instruments.

"Billionaires are taking money off the table where available, while uncertainties in the economy and the historical highs found in deals have resulted in cash-flush portfolios", the report said.

Hopefully, the dreadful mood will change next quarter but the concerns of the market's experts are definitely not something to neglect.

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