William Blair macro analyst Richard de Chazal and specialty retail analyst Dylan Carden unpack why retail stocks are under pressure despite solid earnings, exploring the impact of tariffs, supply chain shifts, and what it means for the holiday season.

Podcast Transcript

00:28
Chris T
Hi, everybody. Today is Friday, August 22, 2025. Welcome back to another episode of Monthly Macro. This month, we're diving into the heart of earnings season with William Blair macro analyst Richard de Chazal, and then a specialty retail analyst, Dylan Carden from William Blair, who we've actually had on before. Dylan just recently released a timely report titled “Mid-Earnings Check-In – Highlighting Top Names in a Volatile Earnings Season,” so I figured that would be, as I mentioned, timely and worth a discussion.

So, the report explores why companies with solid fundamentals and decent guidance are seeing muted or even negative reactions this quarter. It also examines how the latest round of reciprocal tariffs enacted earlier this month are reshaping the retail landscape, with rates in key sourcing regions coming in well above expectations.

So, I've asked Richard to kick things off. I figured he'd be a good moderator this time around. You know, this conversation is probably best served by the people who actually know what they're talking about. So, Richard, Dylan, feel free to take it away.

01:22
Richard D
Thanks, Chris. And thank you, Dylan, for joining us. I know you've been having a pretty busy last few weeks with earnings season and then I think you've just come off back-to-back, roadshows with clients, so thank you very much for sparing some time for us today. You know, as Chris mentioned, I think, you know, you wrote a really interesting and incredibly thorough mid-earnings check-in note to sort of, I guess, try to clarify what seems to be a somewhat confusing picture we're getting on the consumer, at the moment.

So, you know, well done on that report. I thought it was really helpful, and I'd encourage anyone who hasn't taken a look at it to please do so. So, maybe just to set the scene, you know, the way I kind of see at the moment is that where we are now seems like we've kind of just passed “stage one” of tariff implementation, which has been the uncertainty - what tariffs are going to be and on which country, even though that doesn't seem to be set in stone, really. But at least, you know, we have a pretty good idea. And now we're sort of in “uncertainty phase two”, which is, you know, how much of those tax increases are going to get passed on to the end consumer?

How much are companies going to absorb? Or, how much are they going to pass on to the different stages of the supply chain? And, I think what we've also seen is that foreign exporters are definitely not paying for these tariffs. So, you know, if that was going to be the case, we would have seen import prices coming down quite sharply.

And, you know, that's not happening. I think the latest non-fuel import prices to July year-to-date compared to the previous year were up 0.9%. So, I think, you know, we're basically trying to figure out here just how sensitive consumers are going to be to these tariff increases. And, I think for that, the economic data kind of lags a little bit here.

I think we really need to listen to what companies are saying specifically with their guidance, so I think that your note was very important here. And, I think what you tackle from the outset is the fact that, you know, earnings seem to be good and more importantly, guidance seems to have been decent. Yet, a lot of the stocks in your coverage either haven't really responded or, you know, responded negatively.

We also saw in our colleague Sharon Zackfia’s coverage where some of the fast casual restaurants, they've had sort of mixed or quite sharp, negative responses from investors on sort of decent news. So I guess, Dylan, my question to you is, you know, on the macro front, you know, what signals should we be taking from what we're seeing in the earnings season for the retailers with regards to the U.S. consumer? Is the stock market picking up on something we’re maybe not really seeing in economic data just yet? Or, is there too much noise to really get definite opinions?

What are you thinking at the moment?

05:05
Dylan C
First, thanks for having me and thanks for the kind words on the report. I really appreciate that. I think if we've learned any lesson in the last year, however, you want to kind of quantify the Trump window, even going back to his first term, it's that knee jerk reactions, you know, tend to be unadvisable. And, so I think the broader framework here is just a certain level of uncertainty that, I think, is sort of level setting a relatively expensive market, right? But it's not to say that we know anything for certain, is sort of the only place I'm really going with that. I think what is reflected now in some of these sorts of reports that you're seeing, and to your point, the reaction to them, is a greater acceptance of that level of uncertainty, right? And, so, while tariffs have been in the headlines now since spring, really since January, they haven't really been in the numbers in any meaningful capacity.

So, if you're thinking about, and if you look at some of the commentary we included in that report, you've referenced, it's really much more about couching guidance and couching a relatively uniform level of caution. And the idea that this higher level of pricing, which, to your point, is going to be borne by these companies, could theoretically flow through to higher pricing. Now, depending on what category you're speaking to, I think there's limited capacity for pricing, but it's lose-lose, right?

You either take price and stunt demand or you can't take price and you stunt margin, right? And so, there's this certain level of trepidation and yes, wait and see, to kind of figure out what scenario plays through. And there's winners and losers, right? I mean the value channel is already kind of showing a general resilience, which, you know, still seems to be attractive, although it is, you know, keeps getting bid up.

But, really, it's in that kind of more core, full price, fashion-centric, trend driven segments of the market where I think you're seeing a little bit more trepidation in and around that kind of a setup.

07:13
Richard D
Do you think, I mean, I think the way I, when I look back at the progression of earnings, estimates, you know, over since the start of the year, it felt like once Trump started talking about the tariffs, it was the really the first quarter’s earnings season where you saw a big take down in guidance than estimate. And, I haven't seen so much of that in the second quarter.

So, you think it's more, just been a little bit more subtle, a little bit more couched the way companies have been talking about it this time around?

07:47
Dylan C
First quarter guidance, or sorry, the guidance that was given during the first quarter, which for a lot of my names was when China was still 145% incremental, right?, was sort of three flavors. One pulled entirely, right? The other was maintained with some assumption that things, you know, there was a broader range of outcome, or people just haircutted at whole cloth.

And those, sort of the first and latter of those, were really, kind of, the more common. And so, yeah, I do think that in the, kind of, fever pitch of that first round in early April, there was a larger cut. What's interesting, the nuance now, and I think what seeds some of this broader uncertainty is the understanding, in that time, was that China was 145 and likely to be just big no matter what, right?

I don't think anyone really fully believed in that number. But, the rest of the world was expected to kind of net out around 10%. And so that was sort of causing this mass migration elsewhere. And, what you're seeing now is actually a non-China rate settling down closer to 20%. And, so, that strategy of moving out of China, it's not that it was ill-informed or misguided, it just, it won’t theoretically have the same impact as sort of initially thought, right? And, so, I think there's incremental risk that's not necessarily in earnings revisions per se, but just in sort of general mindset and, and sort of valuations, if that makes sense.

09:17
Richard D
So, basically saying that, all of these companies figured they could do the China plus one and just move to the extra one, to Indonesia, Bangladesh or Vietnam, Cambodia, that kind of thing. And then, they've been whacked by much higher tariffs. So, Trump is saying it's not just about China, it really about reshoring.

09:43
Dylan C
What's interesting is that the minimis loophole, which we thought was being used predominantly by, you know, low-cost Chinese manufacturers, is actually more broadly used by U.S. companies. And so, that's another thing that, as that shuts off, you're going to see, you know, companies that were trying to ship in from Mexico or Canada or wherever it was, some big names… you're going to see, I think that sort of take an incremental hit to margins.

So, you know, we're trying to really wrap our heads around, now that these numbers are going to start being impacted, how that's going to flow through and, typical of any environment where there's all sorts of uncertainty, there are these unforeseen impacts that I think people are trying to wrap their head around. And so, it's always true that the market is forward-looking, but rather than react even to clear momentum and to its immense credit, consumer resilience, you know, we're much more focused on trying to, kind of, “game out” some of these broader margin and top line uncertainties.

10:46
Richard D
What are you thinking, like so, on the timing of what companies are saying? I mean, do you get a sense that we have this big buildup in inventories during the first quarter, and now they've been running it down, so they have been able to refrain from passing on tariff increases, which they haven't had… has that been mostly in big consumer durable? Like, furniture companies, where you can only stock a warehouse with so much furniture so you’re seeing them raise prices earlier, whereas, you know, a company that does apparel, t-shirts, trousers, can stock their warehouses to the rafters, pretty much.

And they're going to be seeing price increases much further down the line. Is that something that… so, essentially, it's sort of this slow-moving price impact rather than… or are companies thinking about the consumer and how much they can pass on, so they don't just push it through immediately and maybe trickle it through?

11:58
Dylan C
That one.

Oh, I mean, look, the furniture and new use vehicle numbers, if you look at the month over month, right? In the June report, you're already kind of seeing those prices tick up. And what I'm hearing from companies in my coverage, is that they haven't really pulled the price lever at this point. And that's reflected in actual data to this point, right?

I think more, I think you have to give the pandemic a certain amount of credit for helping people really sharpen up their supply chains, right? All of that volatility that was created by lack of access, then the increase that you saw in shipping rates from 2,000 to 12,000, right, for a container coming out of China, to pull forward, to try to get ahead of some of that stuff, to then the oversupply that we had in 2022, right?

I think the best companies I cover, took from that period, a certain learning that it's best not to overcorrect for certain near-term volatility. So, I don't really think, for a lot of the major companies, at least, that you saw a lot of pull forward of inventory, and particularly because, it depends on sort of what segment of the market you're talking about.

The more trend-driven, or weather-driven, even, that your product is, the harder it is to, kind of, sit and hold it, right? And you're even hearing that from off-price this season, right? They're not really doing a lot of “pack away”, right?, which is what their opportunistic buying, right? And so, again though, that cedes a certain amount of risk.

And that, now that you're going to start seeing that product flow through with that higher tariff rate, really what we're talking about is the August inflation rate and really much more of the back half inflation rate, particularly holiday. Right? I mean, I think the unspoken risk here is that holidays, you know, historically when you do 33%, a third of your overall earnings for the year for a lot of these companies and sort of what does that actually look like?

And how does that set up the initial earnings estimates for 2026, right? That's the mentality that you're, kind of, guiding from.

14:01
Richard D
And when you mentioned, sort of, lessons from COVID-19 earlier. Do you think that, you know, companies, one of the lessons they also learned, and certainly the Fed and when I look at monetary policy, one of the lessons was, consumers really, really do not like inflation and don't like high prices. And that that became very clear.

And then, so, retailers have kind of picked that up, as well. And there's a certain trepidation much more about, you know, they’re sort of really just gingerly testing the waters.

14:39
Dylan C
I think that's totally fair. And it's also true, too, to that kind of same line of thinking, we've already had a lot of inflation. So, you take a category like apparel, and I think we've spoken about this… what's fascinating about apparel, if you go back to the mid-90s, from the mid-90s to right before the pandemic, the entire, not the annualized, but the entire rate of inflation was something of a magnitude of 40 basis points, meaning that you, more or less, are spending the same thing for that shirt that you were in 1995.

15:09
Dylan C
And then, all of a sudden, between 21 and 23, the apparel category aggregated a 10% price increase. So, for a category that had no pricing power, largely born from the fact that inflation has been housed in categories like healthcare, education and housing that it effectively crowded out a lot more discretionary categories, in three years, you took more price than you have in decades.

And so, the real question is, well, how much capacity do you have to take more price now, right? And that, by the way, the tariff rate when apparel was doing that back then was 7.5% incremental out of China. Now we're talking about a relatively uniform 20% to 30% incremental out of the rest of the world, right? So, this is where you start talking about, okay, you've got less capacity to take price in certain categories, and I would think a lot of discretionary categories are in the same relative bucket, right? Because, again, inflation has been housed in relatively very high ticket, non-discretionary categories. You've got, and this is sort of me getting over my skis, and I'd love to hear your view on this, you've got a dollar that's not cooperating because historically the dollar has strengthened to help you offset some of that tariff risk.

And you've got suppliers that, you know, as far as my understanding is, don't have a lot of margins to work with, right? So, your levers to sort of mitigate some of these tariff risks are relatively few compared to where you were a couple of years ago. And so, I think that, again, price is something that everyone's kind of handwringing over.

My view is that price isn't as much on the table as it might otherwise be expected to be. Or, if it is, you know, yes, I think you're looking at a consumer that's got less and less capacity to absorb it.

16:45
Richard D
Interesting, yeah. And, are you seeing that in, you know, spending? So, the way I look at the tariffs, too, is it's a relative price change. So, you know, if you're going to be forced to spend more on a staple, you're going to spend less somewhere else on a discretionary.

17:11
Richard D
And you're clearly seeing that. So, from the inflation perspective, maybe the aggregate inflation index moves less, but under the surface you're seeing a lot of moving parts.

17:22
Dylan C
It's so wonky, you know? I mean you mentioned restaurants in the lead into this, right? You're looking at some of the fast, right, sort of the franchisees really sort of feeling the pinch, right?, which is that lower income consumer. And yet, you're seeing kind of “sit down, fast casual,” whatever you want to call it, doing well, right, which is, you know, theoretically, at odds with this idea that the consumer is stretched, right? You're not seeing that trade down, right? And, so I think it's really hard to pin where the consumer is right now. But to that kind of underlying thinking that you laid out, I think you're going to see it in weird ways.

So yeah, you could get an aggregate inflation that's higher because it's sort of more reflective of non-discretionary categories, and you're seeing that in housing, of course, right? That's not really budging anywhere, and in furniture and recreational vehicles. But that, I think, could force inflation and other more discretionary, smaller ticket items to be stretched even further, and people to, sort of, run to more value-centric offerings.

But it's really hard to pinpoint. And again, I think it brings a certain amount of volatility and uncertainty more than it does a definitive view of what's about to happen.

18:34
Richard D
Yeah. So, does that mean then that, you know, some of these largest retailers have a big advantage over some of the smaller ones? The largest ones that can be quite aggressive on price, are they are they opportunistically using this to squeeze out competition?

18:52
Dylan C
Exactly. And look what you saw the other day from, you know, the second-largest U.S. retailer. You know, their inflation, they couched at about 1%, right? And so below the category, below the aggregate inflation in the country, right? And so, yeah, I think if you have clear tangible advantage over your suppliers, if you have clear tangible advantage over your competitors, and you already are a value-centric channel, those are the ones that are going to feast in this type of environment, right?

And even, it's more nuanced than that, too. Even in companies that sort of do a combination of proprietary and wholesale selling, you're hearing those companies speak to this capacity to hold their own proprietary price, let these smaller national brands take price and try to sort of cede a competitive advantage, even within their own business. There's gamesmanship even within those types of businesses, as well, right, which applies to a lot of large retailers, a lot of smaller retailers, right? But scale, now, is important as it's ever been, I think. And if people are trying to sort of batten down the hatches, weather through whatever rolls through and, you know, come out at the other side with incremental dollars and market share.

20:05
Richard D
Not a clear situation, is it? This, you know, I guess, uncertainty from the beginning. You know, I think in the economic data that I look at, you know, if we look into consumer, I think we see the consumer is actually in decent shape. Aggregate, like balance sheets, are good, and it’s just becoming a little bit more patchy in certain parts.

And if we look at, say, wage growth, we've seen, you know, wage growth by quartile. We've seen the lowest income wage groups come down, though maybe that's tougher comps because they had a huge run up previously during the COVID-19 period. But, as you say, you're not really seeing so much of that in some of the stock data.

20:53
Dylan C
Or, yeah, aggregate spending data, right? I mean, we're so eager collectively as a market. And, you know, I would love to hear your opinion as far as reflected in some of your conversations, it feels to me that we're so eager to continue to second guess when this consumer breaks, because against all odds, they've been relatively resilient, with some exception, right, with certain weather disruption last fall, earlier this year, clearly headline risk flowed through in April through June. But you know, by and large, I think exactly that data you're speaking to, that huge growth in particularly the lower tier customer, lower to middle tier consumer, real wage growth which has been relatively elusive, that has sustained, I think, a general demand environment that has held up better than what you and I could paint as a more likely narrative, given everything that's had to be absorbed by the market.

And, so, I think that creates a knee-jerk instinct to say, okay, there's an overall downside risk to all of this. And that could very well play through. The reality, and what you're seeing from some of these companies is much more nuanced than that. It's a, we're about to absorb yet another major incremental potential price increase or margin impact, and we'll see how the customer reacts to that, right? And yes, compared to where they were during the pandemic, compared to where they were in 23 and 24, coming off of that wage inflation, this feels incrementally more risky. And I think that's fair.

22:26
Richard D
Again, I think the consumers kind of in this “muddle through” environment, it's going to be a little bit bumpy. I think what's key is that the consumption patterns that we've seen over the last few years haven't been credit driven. They have been income driven. We had the pandemic savings that was spent down. And again, I think from, you know, we do hit some bumpy patches, the Fed are going to start lowering rates soon. I think the fact that consumers have pretty good balance sheets probably means that they're going to be more receptive to lower rates this time around. I think home buyers are just waiting to pounce on a mortgage rate that goes tangibly, maybe below 6.5%, 6%, something like that.

They had problems even before the pandemic finding workers, and again during the pandemic it was a lot worse, particularly service retailers. You know, with the tariffs…these companies, they know how hard it was to recruit, to train and retain these workers. They're doing some hoarding of these workers, you know, despite any pain from the tariffs.

But, do you get the sense that they're really holding back a lot, and at some point maybe that dam is going to break? They're just going to say, “all right, these costs are a bit too high.” And, once one does it, they can all start, sort of, because what we're seeing now, as I said at the beginning, is, that we're sort of in this low-hire but low-fire environment and they're holding back. They're keeping these workers that are really true assets to them, reluctant to let them go just yet.

24:45
Dylan C
I'm so scarred by recent events and that it feels like there's just, the market coming out of 2020 feels like it moves in between massive extremes, right? So, take the IPO market of 2021 that led to the drought in 2023, right? Take the housing market, you know, this huge peak of demand that led to now a prolonged winter, right?

And so, my fear is that, you know, we're looking at this no fire, no hire environment, and claiming, sort of, a certain amount of positivity from it. And yet, is that sort of the beginning now where it's going to lead to, you know, a higher level of unemployment? I'd love to hear from you, and so that's my that's my bias, right?

Like that, to me, reaches a certain amount of skepticism and that I think that it could be any, and then you take AI into it, right? And yes, having to absorb tariffs and costs, and what's the demand environment and how much you need to build up. There's all sorts of unforeseen circumstances out there though in and around private capital, right?

All these data centers that are being built. So, I'm in rural Michigan, and my neighbors are salivating at the fact that Amazon's over there in Laporte, Indiana, paying people time and a half for the next ten years to build all these massive data centers, right? And, so, what does that do? And is that a form of sort of private capital stimulus?

There's also the boomer cliff, right? A lot of industries, like ours and including ours, have a huge retirement wave that's on the precipice of happening, right? What does that do from a training needs base, right? And is AI being overblown? Is this thing that's going to actually replace labor, whereas in reality we haven't followed the bouncing ball as far as like, well, how do we actually train and retain? And what's our actual underlying need for younger talent, right?

So, the employment pictures, and I'm not claiming any understanding here, is one of the more baffling to me.

26:40
Richard D
Yeah. I mean, I sort of see it as a structurally tight labor market. You know, we've got the boomers leaving at one end and then, at the other end, fewer are coming in with lower birth rates. And then, if you're pushing back on immigration, you know, that market is tightening. So, AI is a helpful release valve.

27:04
Dylan C
I guess the net of all of that is I don't see the employment picture changing necessarily, though I fear, right? Just given, kind of, again, the bias of, sort of, the volatility that you've seen and, kind of, claiming victory at one end of the spectrum, and then what plays through over the next two years. But it does, I agree with you, that it does feel tight and structurally so which should, again, continue to support wages to some extent, right? Even above a level of inflation that I don't think you're going to see roll through discretionary category.

27:32
Richard D
Yeah. I mean, I think essentially what we're seeing is these, I sort of describe the tariffs as friction. You know, you're sort of throwing a bit of sand into the machine. The gears are still turning, but they're just not grinding as smoothly as they were before. And you got to work through it. A company kind of has to find a different way of operating to get that.

You're moving away from what was the first best option to the second or third. And, so are we actually seeing that? So, what have the companies done in terms of their production? They move out of China, what are they doing with, you know, Bangladesh? Or are they moving back to the U.S.?

28:19
Dylan C
Well, in apparel, you're not going to see U.S. production, you know, barring very few examples. And then that's just a labor cost, labor training issue, right? And, in particular with sort of a migration policy that's restrictive. The initial playbook was, yeah, get everything out of China to the extent that you can, right?

28:39
Dylan C
Because China, they've been at this for centuries, right? China still has the highest, you know, China and Vietnam combined, and a lot of the Vietnam factories are indeed Chinese, you know, had the highest skilled workforce the past. So, if you're making sneakers, or high-end knitwear, or silks, or, you know, a certain amount of lacewear, that's all China, you know, or Vietnam via Chinese factories. But to the extent you can move some stuff out, yeah, India, but then look at India. India is in a precarious situation right now given its relationship to Russia, right? So, there's not a good playbook that I've heard out there. I think generally speaking, not knee jerking, everyone's in the same boat, right? Those tariffs, I mean, one of the nicest things you can say right now is that everyone seems to be kind of stuck in around 20%, right?

So, there's not really a need to do too much gamesmanship between countries. So, I think the migration out of China is still a net good in that it's not 30%, it's 20% incremental. But, you know, I think people are kind of taking a beat because this is still so much in flux, as well.

29:42
Richard D
Next quarter, third quarter earnings. You know, we get to earnings season. What do you think companies are going to be telling us then?

29:52
Dylan C
Wow, what a great question.

29:54
Richard D
Sort of the same as what we're seeing today? They just pass through a little bit more price?

29:58
Dylan C
Well, you know, better than anyone, right? Like, the arc of all of this is under-promise, overperform, right? And so I think when you get into a situation where you've now got a lot of caution being packed into the back half in and around tariffs, which are a deep uncertainty, it's hard to imagine that these third quarter numbers are being optimistic, barring some sort of cataclysmic event or sort of larger draw down on discretionary dollars, which, I think, my view, and I think borne out from this conversation, the probabilities of that with the labor force where it is and inflation still relatively, you know, tempered, and, you know, likely less price be taken discretionary categories will still be a relatively healthy demand environment, all else equal. So, I would expect, sort of, again, that just sort of the volatility that's permeated the markets over the last five years, I would expect a net healthier earnings season coming off a relatively dour earnings season, right? The volatility is going to work in effectively the opposite direction, just from a weight theory standpoint.

31:00
Richard D
Sure, I guess, Dylan, I mean, to sum it up, the message, you know… so again, going back to the start, how investors are interpreting what companies are saying, you know, is that the right signal?

31:17
Dylan C
Investors are interpreting, in my view, body language from management to suggest a certain level of uncertainty that the market is always going to discount, right? The trade, as it were, would be to say that uncertainty is breeding an abundance of caution in and around how companies are speaking to their back half numbers, which in theory, if you're banking on a still healthy consumer led by full employment and somewhat tempered inflation, should be okay, right?

Valuations are where they are. That's been something that we've been kind of trying to sort of figure out for a while now. The negative case would be they’re right. There's a whole bunch that the market is set to absorb here. There's less capacity to absorb it than you would otherwise expect, given kind of what we've been through already.

And those numbers are more or less correctly set, right? And the market could see some sort of drawdown, but it just feels like between rates in a, you know, negative or rates coming in, employment where it is, we haven't talked about stimulus, right? This administration seems very reticent to allow for a negative economic environment, right? So, to what point do you sort of put some stimulus in the market, right?

There's just all sorts of things to think that they're going to try to manage this in some capacity, until they can't, right, until it just totally breaks. And we don't get economic data anymore. And, you know, inflation is just through the roof or whatever it is, right? Like, I think you can still catastrophize with some relatively simple data points or sort of thought lines, but for now it feels like, and I'd love your view, too, come third quarter, you know what are you expecting on the economic front? I guess we're going to be probably at that point looking at a lower rate or a new Fed chair...you know what are you kind of looking at up there?

33:15
Richard D
Well, I don't think…I think Powell is there until May, when he leaves. But, you could have the appointment of a, well you know, not the appointment, but I guess the choice of a new Fed chair, the next one to be to be sitting in the seat in May, that potential person could act as a shadow Fed chair.

So, haranguing from the sidelines as Trump himself and Bessent and Co have been doing. I think it's still going to be a little bit bumpy. I think we're still going to see pressures on prices going up through the third quarter, and what's left of it. But, the fourth quarter, I think we'll see a little bit of give on the employment front, what we're seeing now is the duration of unemployment is increasing.

So, those workers who have been laid off are not being recycled back into the labor force very quickly. So, I think that's somewhat pernicious, sort of a slow deceleration, but not a sort of collapse. And my fear would be, that I was alluding to earlier, is that companies have been hoarding labor, and they decide all at once that, you know, to let those go.

I don't think that's really going to happen, but I think there's going to be a little bit of give there, which will encourage more rates coming down. And I think that we’ll be less worried about the inflation side of its mandate and a little bit more worried about the employment side.

34:51
Dylan C
I mean, there's an air pocket out there, no question. You know, it's just, I mean, another fascinating one is the recent graduate unemployment, right? And does that sort of seed a cohort, like we speak to this cohort of people that are sort of educated during the pandemic, does that seed an under skilled cohort of workers that shows up in another way, right, in the next, kind of five years? It does feel like we're just… uncertainty on top of uncertainty on top of uncertainty breaks.

It just doesn't feel like it's, you know, this next quarter or the back half of the year, to me, personally. And I like your line of thinking in that it's a much slower rolling boil than in any one kind of major cut, but we'll see.

35:34
Richard D
You know, one of the things you're looking at, too, is actually tax refunds next year…sounds like they're going to be quite large for a lot of the stuff that came through in the One, Big, Beautiful Bill. You know, there's going to be a bit of a bump there. And, I think a lot of those consumers like to spend those pretty quickly.

So that's, that's a bit of an upside risk, I think, for the first half of next year.

Or does all this capital and savings that are trying to be, at least narrated, does that flow through to the consumer in some capacity, right?, to avoid a certain amount of drawdown? You know, I just, it's all very difficult. But, for now, it feels like this is just a pause and adjustment as opposed to the beginning of something more significant, to me, personally, from what I'm seeing in my very small corner of the market.

36:27
Chris T
All right, well, Dylan, Richard, that’s all the time we have for today. For those interested in reading Dylan's report, you can request a copy by visiting WilliamBlair.com/contact-us. Thanks for joining us, both you guys. It's been a pleasure.

36:41
Dylan C
Thank you very much. Thanks, Rich.

36:43
Richard D
Thanks, Dylan. Thanks, Chris.