The consumer is in an awkward spot.  Real disposable income is in negative territory — a rare sight.  PCE has held up, however, due to OBBB benefits and a declining savings rate.  Some think the savings rate is a red flag… we see it as yellow.  Consumer stocks have been a minefield.  The sector has felt irrelevant in an AI world, and sales and earnings trends have lagged the broader market… despite a shot in the arm from tax refunds.  We think the consumer will…

The consumer is perceived to be the stalwart of the US economy, but it’s more nuanced than that.   After all, the two largest consumer markets — housing and autos — have been floundering.  Those pockets of weakness have given oxygen to other areas of consumption.  So long as that’s the case, the status quo can prevail.  To assess what lays ahead, we quantify the macro crosscurrents acting upon the consumer.  We also offer an outlook for global brands, retail stocks, consumer staples, leisure, housing and…

Rubinson Research is now four years old.  We were more optimistic than most for the first three years and we’ve been more cautious than most for the past year.  We’re not betting against the consumer, but our sense is that companies (and some investors) are taking the consumer for granted.  We always stick to the math, and absent a major uptick in employment, the outlook isn’t terribly inspiring.  This 30-minute webinar is chock-full of thought-provoking data.

We’ve spent a lot of time trying to understand how the consumer will behave in 2026 and 2027.  Population growth will be anemic, job growth is already weak, and the risk associated with AI is on the come.  The OBBB will serve as a counterweight, but it’ll be more of a sugar high than a panacea.  We think retailers are the best bet in consumer-land due to (i) elevated tax refunds, (ii) a rate environment that favors goods over services, and (iii) the global brand-emic.

The consumer has been a juggernaut, but the math doesn’t add up.  Employment, the engine of consumption, has stalled.  It’s not because of AI — that risk is still in front of us.  The high-end has been driving PCE, but the “wealth effect” is probably not as durable as some suggest.  Our math says a 2% change in home values is worth as much as a 10% move in the S&P.  We are cautious on leisure.  It makes sense to own retailers during a brand-emic.

We’ve been expecting the consumer to hit a soft patch, and recent employment data have made that outcome more likely.  Fiscal stimulus and rate cuts will help stave off a bigger issue, but portfolios might still need to be reoriented.  We think rate-sensitive names will continue to work — we’re especially fond of housing-related stocks.  And, we built three frameworks to identify stocks that can bridge a gap.  They identify issues with (i) pricing power, (ii) asset-light models, and (iii) good shock absorbers.