After turning more cautious on the consumer, we’ve received a lot of questions from clients. This report seeks to address those queries while adding a healthy dose of micro analysis to our macro call. We share updated thoughts on autos, RVs, housing-related stocks, staples, and leisure. We also dig into historical return profiles of consumer stocks.
Key Points: Our optimism for the US consumer has been well placed. The consumer has been remarkably resilient over the past few years, largely due to strong labor markets and bulletproof balance sheets. The current year is off to a good start, but as we peer into 2025, we expect spending to slip into a lower gear.
Key Points: The low-end has been struggling for a while, but recent commentary from McDonald’s, Dollar Tree, Five Below, and others has fueled investor concerns. The aim of this report is to add clarity to the debate, and to determine whether a bet on the low-end makes sense.
Key Points: When it comes to the consumer, market participants spend a lot of time and energy studying the demand side of the equation. Supply dynamics often get short shrift. In this report, we analyze the supply of labor, the supply of fixed capacity, and the supply of inventory. Understanding the supply side can also tell us something about where inflation is headed.
Key Points: There were more than a few landmines in the consumer sector during Q1 earnings season, and lately, it’s been bellwether stocks like Starbucks, McDonald’s, Nike, and Lululemon that’ve been sounding the alarm. The aim of this report is to understand whether Q1 results signal a softening consumer, or if the issues are idiosyncratic in nature.
Key Points: The gig economy remains a mystery. It’s estimated that 25% of the population participates in informal work, but their efforts are not captured in official statistics. If they were, employment would be higher by as much as 4%. The gig economy has spawned some interesting business models like Uber and DoorDash. This report offers a perspective on those platforms and compares them to other delivery-based models, including Dominos, Amazon and UPS.
Conversations with CEO/CFOs: We added a new feature to our “Up-to-Data” podcast series. This week’s issue features a 30-minute conversation with Ed Bastian, the CEO of Delta Airlines. Ed has led Delta’s employees, customers and shareholders through some turbulent times. In the process, he and the rest of the Delta team have built trust with customers (empathy), employees (no furloughs), and shareholders (no dilution). We talk about the state of the consumer, the outlook for growth in the airline industry, the potential for AI to…
This installment of our “Up-to-Data” podcast is more comprehensive than most. We take a step back to see what the latest data are telling us about the consumer. We cover the labor market, excess savings, the wealth effect, goods vs. services, household balance sheets, inventory dynamics, the housing sector, and leisure. Coming soon: Conversations with Corporate Execs. Many of our future podcasts will feature interviews with corporate executives. We’ll be talking to them about the consumer overall and trends in their business. Our first conversation…
The Presidential election is not far away, and this installment of our “Up-to-Data” podcast explores how policy might influence consumer behavior. When it comes to policy, there’s a lot to consider, and we’re especially attuned to distributional shifts that could occur as a result. The presentation also takes stock of household balance sheets, including the supply of credit. Finally, we touch on “inventory freshness” now that retailers have finished reporting Q1 results — the outlook for gross margins is still biased to the upside. The…
We’ve analyzed a ton of new data over the past week. Issue #4 of our podcast makes sure you are up to date. It walks you through incremental data from the Fed’s Senior Loan Officer Survey, April retail sales, e-Commerce penetration, Capital One, Discover Financial, Home Depot, the New York Fed’s household debt and credit report, the San Francisco Fed’s excess savings analysis, and more. We expect the consumer to remain strong. In our view, mixed signals from companies have more to do with lower…
In issue #3 we analyze immigration, excess savings, and the low-end consumer. Immigration has been a big contributor to the labor force, and with elections in the offing, it presents more than a trivial risk. We track the amount of construction put into place due to the CHIPS Act. We also offer an analysis of the US mattress industry. We compare units sold to normal, and we stack up the TPX business model to other vertically-integrated retailers/brands.
In issue #2 we analyze the effect rising energy prices may have on consumption. One month ago, energy prices would’ve been a 75 basis-point “good guy” for the consumer. Now it’s more of a marginal friend. We measure inflation by income cohort, also focus on credit card delinquency trends and the profile of housing inventory.