How should investors feel about the state of the consumer?

Retail earnings indicate a slowdown in consumer spending for late 2023, causing investors to be uncertain about the direction of the market and retailers to consider discounting to attract budget-conscious consumers.

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Relevant topic timeline:

8/23/2023

Credit card spending growth is slowing — it’s 'inevitable,' expert says

Consumer spending growth is slowing as the economy stabilizes, with consumers prioritizing essential purchases and adjusting their spending habits in response to rising interest rates and financial pressures.

8/25/2023

U.S. Consumers Are Showing Signs of Stress, Retailers Say

Despite overall solid consumer spending, retail earnings reports indicate a shift towards more cautious shopping habits, with lower-income shoppers feeling economic pressure and opting for essential items and discounts at off-price and discount retailers. Delinquencies on department store credit cards are rising, suggesting a stretched consumer, and retailers are bracing for the impact of the resumption of student loan payments on shoppers' budgets. The upcoming back-to-school season and Halloween will serve as indicators for the rest of the year and the holiday season.

8/29/2023

US Consumer Confidence Pulled Back in August

Consumer confidence fell in August 2023, erasing back-to-back increases in June and July, as consumers expressed concerns about rising prices, employment conditions, and future business prospects amidst a cooling labor market and high interest rates.

8/31/2023

Struggling US households may soon max out their credit cards as banks get skittish

Consumer spending is driving third-quarter GDP growth, but unsustainable spending habits, tightening lending standards, and the depletion of pandemic savings may lead to a decline in consumer spending in early 2024.

9/14/2023

Retail Sales Rise on Higher Gas Prices But Underlying Spending Slows as Inflation Persists

U.S. retail sales rose more than expected in August due to higher gasoline prices, but underlying spending on goods slowed as Americans faced increased inflation and borrowing costs, while the trend in underlying spending on goods was not as robust as initially thought in July. Despite this, overall consumer spending is expected to remain strong, driven by spending on services.

9/19/2023

Retail Holiday Sales Slow but Steady as Shoppers Splurge on Electronics and Dining Out Despite Economic Pressures

US retail sales, excluding automotive, are expected to rise by 3.7% over the holiday shopping season, indicating a return to pre-pandemic levels of holiday spending, driven by a more normal inflation environment and consumers' willingness to spend on experiences, electronics, and dining out.