Summary Points Consumer sentiment has been falling like a rock. The June reading was the lowest on record. It’s hard to imagine that consumers are feeling worse today than they did during the 1973 oil crisis, the Vietnam draft, the wake of 9-11 and during the depths of the Financial Crisis. In this report we study what drives consumer sentiment. We also assess whether it matters to future consumption trends. We built a model that

Summary Points Surging energy prices are taxing consumers $25 billion on a monthly basis, equivalent to 2% of total PCE. Lately, prices have come off their peak and where they’ll head is anyone’s guess. Our goal with this report is to establish a framework for investing in consumer-related stocks during periods of energy price volatility, regardless of whether prices are moving up or down. We’re tracking daily spending trends in states with high gas prices,

Summary Points Rubinson Research hosted a webinar on June 30th. The aim was to stress-test the consumer by: quantifying many of the headwinds and tailwinds facing the consumer, creating scenarios to frame an outlook for H2 2022, assessing how the spending power of low-end consumers might flex with various assumptions, analyzing the wealth effect and testing how sensitive PCE might be to changes in financial assets and home prices, exploring shifts in household spending, including

Summary: Consumer demand is shifting. Categories that under-achieved during the pandemic are growing +15 percentage points faster than those that over-achieved. At the same time, spending on food and energy is claiming an incremental 0.7% of aggregate PCE. This has created an opportunity for some and an air pocket for others. Supply dynamics are further complicating the matter, and in this report we dig into inventory and capital spending to assess the supply side of

Summary Points We estimate that household wealth is down by ~$8 trillion since the year began and investors are wondering whether that will put pressure on consumption trends. After all, the consumer is already feeling a pinch from surging gas prices, broad-based inflation, rising mortgage rates and tough comparisons. In this report we assess whether the consumer can tolerate a drop in wealth or if it’ll put them over the edge. We measure the wealth

Summary Labor markets are among the tightest on record with nearly two jobs available for every unemployed person. Part of the tightness is attributable to strong demand and part can be ascribed to scant supply. Real demand for goods and services is 5% higher than it was in 2019 even though there are (2)% fewer people to get the jobs done. Our view is that nominal PCE can grow strongly in 2022, but that surging

Summary Consumer discretionary stocks have come under pressure in recent months, and we want to know what’s priced in. We use a three-pronged approach to assess valuations at the individual stock level: (i) we analyze how consensus revenue expectations compare to ‘normal’, (ii) we estimate company-level operating leverage, and (iii) we use historical multiples to help us understand what type of beat/miss is being priced in. Consumer Durables: Consensus estimates call for companies in the

Summary Most categories of consumption are in an over-bought or under-bought position. Housing has a foot in each camp. Over the past two years, home sales were a million units above trend, but coming into the pandemic sales were 3 million units below trend. Demographics are likely to offer some support from this point forward, but the direction of mortgage rates will probably rule the day. We expect the surge in rates to drive a

Summary Prior to the pandemic, e-Commerce growth had been outpacing brick-and-mortar sales by 10 percentage points. That differential spiked to 40 points at the onset of the pandemic and then fell sharply in the following year. We’re of the mind that e-Commerce penetration is likely to head higher from this point forward, and we built a framework that assesses the vulnerability of 60 consumer stocks. Amazon added an average of 20 million square feet to

Summary In our inaugural report we assessed whether the consumer would buckle under pressure or power through. We concluded that the tailwinds are strong enough to enable solid mid-single digit consumption growth in 2022. This report focuses on how that growth might look across the income spectrum with a focus on the low-end consumer. We built a few models to help frame our outlook for the low end. One tracks monthly spending for ~30 categories