Can the US consumer stay strong?

Bullish

• $US CONSUMER SECTOR— Positive outlook on the US consumer sector driven by strong labor market and wage growth.

  • “We are seeing real income grow at a solid pace, led by a strong labor market that is generating good job gains and a healthy pace of wage growth... I think it will this year too, just in moderation because last year was somewhat exceptional.”

    David·0:00Hear it
• $HOUSEHOLD WEALTH— Strong household balance sheets and increasing household wealth expected to drive consumer spending.

  • “We have historically strong household balance sheets, at least in aggregate. And we're seeing further increases in household wealth that should drive a positive wealth effect to consumer spending.”

    David·0:00Hear it
• $US LABOR MARKET— Healthy labor demand and strong job gains.

  • “Labor demand still looks pretty healthy. Job gains have actually been strong.”

    David·0:00Hear it
• $US STOCK MARKET— Positive wealth effect from increases in the stock market.

  • “We have strong aggregate real income growth supplemented by a positive wealth effect, mainly from further increases in the stock market.”

    David·0:00Hear it
• $RETAIL SECTOR— Robust consumer activity across the retail sector.

  • “We are still seeing a robust consumer, and we are seeing it across retail.”

    Kate·0:00Hear it
• $CONSUMABLES SECTOR— Strength in consumables, household products, and food.

  • “We have seen strength in consumables, household products, food.”

    Kate·0:00Hear it
• $STAPLES SECTOR— Affordable luxuries in beverages and household products remain essential purchases.

  • “A lot of these products are affordable luxuries when you think about whether it's a beverage or a household product, things that these consumers absolutely need to buy.”

    Bonnie·0:00Hear it
• $PRIVATE LABEL BRANDS— Private label brands gaining market share in household product categories.

  • “We analyzed several of the household product categories, and about 60% of those categories, you are starting to see private label take more share.”

    Bonnie·0:00Hear it
• $PRESTIGE BEAUTY SECTOR— Potential down trading into mass beauty categories.

  • “Maybe the other categories within our broader universe, things to consider are prestige beauty, for instance, where there might be broadly some down trading into mass in terms of the beauty category.”

    Bonnie·0:00Hear it
• $BIG BOX RETAILERS— Strong performance in consumables and food within big box retailers.

  • “But the consumables piece, the food piece has been very strong. So that's the trade off that we're seeing within those broader big box that offers everything.”

    Kate·0:00Hear it

Bearish

• $BIG TICKET DISCRETIONARY ITEMS— Stress and pressure in big ticket discretionary items.

  • “Big ticket is probably some place that we are still seeing stress... So big ticket discretionary is still where we're seeing a lot of pressure.”

    Kate·0:00Hear it
• $CIGARETTES— Down trading from expensive to cheaper cigarettes.

  • “There's definitely down trading within cigarettes from the more expensive cigarettes down to the cheaper, more affordable cigarettes.”

    Bonnie·0:00Hear it
• $CONVENIENCE STORES— Softness in convenience store channel as consumers shift to discounters or club channels.

  • “I'm seeing it in a cover the convenience store channel, which is impulse purchase. And you're starting to see some softness there as these consumers are maybe pulling back a little bit and shifting their purchases into some of the discounters or the club channel.”

    Bonnie·0:00Hear it
• $DISCRETIONARY RETAILERS TARGETING LOW-INCOME CONSUMERS— Increasing weakness in discretionary spending from lower income consumers.

  • “We are seeing it on the discretionary side, some increasing weakness from that lower income consumer.”

    Kate·0:00Hear it
• $AUTO PARTS SECTOR— Deferral of purchases in auto parts and eyeglasses by lower income consumers.

  • “Think auto parts or eyeglasses. That's where we're hearing about a little bit more deferral for those lower income consumers who are not necessarily being able to make that purchase right now.”

    Kate·0:00Hear it

Not investment advice.