The recent insights into consumer sentiment and economic outlook paint a complex picture of financial strain and diverging spending patterns across different segments of the economy. With 31% of recent home buyers citing financial challenges like budget constraints and high interest rates, it’s clear that affordability concerns are widespread and impacting major purchasing decisions.
Moreover, recession fears have intensified among U.S. consumers, reaching levels not seen since late 2023. This heightened anxiety reflects broader uncertainties about economic stability and future financial prospects. Despite some marginal improvement in perceptions of the U.S. economy in May, sentiments remain subdued, driven by deteriorating assessments of current and expected financial conditions for American families.
The cost of living crisis is exacerbating these concerns, as highlighted by sharp remarks about the affordability of everyday goods like raspberries. This sentiment underscores a broader issue: the strain on household budgets and the challenging environment for discretionary spending on items like leisure activities and big-ticket purchases such as boats or cars.
The retail landscape mirrors this bifurcation, with distinct trends emerging between retailers catering to essential needs versus those focused on non-essential goods. Discount stores like DLTR and FIVE are facing challenges amid tapped-out consumer spending at the lower end, while retailers like COST and WMT benefit from demand driven by essential purchases like food. TGT, with its focus on durable goods, occupies a different niche in this shifting consumer landscape.
In essence, while the consumer remains resilient in fulfilling basic needs, economic uncertainties and rising living costs are reshaping spending habits and challenging traditional retail dynamics. The path forward for both consumers and retailers will likely hinge on navigating these dual pressures of economic uncertainty and cost of living increases in the months ahead.
31% of 2023 and 2024 home buyers say purchasing a home was harder than expected because of financial reasons, such as exceeding their budget (40%) and high interest rates (38%), per Clever Real Estate.
— unusual_whales (@unusual_whales) May 30, 2024
JUST IN: 69% of US consumers currently believe it is likely that a recession will hit over the next 12 months.
Recession concerns have risen for the 2nd straight month and are at their highest since November 2023.
Overall, consumers' expectations about the US economy slightly… pic.twitter.com/xlOfd1tcTh
— The Kobeissi Letter (@KobeissiLetter) May 29, 2024
"Anybody wondering why no one's having kids?"
"It's because the raspberries are $6 ph*cking dollars"
"That's why no one's having any kids"
Cost of living crisis is no joke …
— Wall Street Silver (@WallStreetSilv) May 29, 2024
The consumer is not dead, they need food and clothes. Are they committing to spending money on things to have fun? Boats, Cars, RV's, Casinos, or are they no longer committing to 5-year payments. Yes, anything where you can walk in with $100 and buy something is doing much… https://t.co/W8kS1harxt
— David Nicoski CMT (@davevermilion) May 29, 2024
The Fed Thinks It’s Fighting Inflation. Think Again.
Even at more than 5.25%, the central bank’s short-term interest-rate target might not be high enough to cool the economy.
To a large and under-appreciated extent, the job of the US Federal Reserve entails chasing an elusive…
— Win Smart, CFA (@WinfieldSmart) May 30, 2024
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