The retail sector sees signs of a cautious consumer
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The retail sector sees signs of a cautious consumer
It’s a big week for economic data, with the Labor Department’s Consumer Price Index due on Tuesday and the Commerce Department’s retail sales data out on Wednesday.
Let’s start with consumer staples — things like toothpaste, cleaning supplies and other packaged goods.
Brittany Quatrochi, an analyst at Edward Jones, said while consumers have been pulling back, the scale has been “much less than what you would have expected, based off of the magnitude that we’ve seen of those price increases.”
On the other hand, we’ve been seeing signs that people are cutting back more on discretionary purchases — think clothing toys and electronics.
“Most of the retailers have discussed how the consumer is being very selective,” said Mickey Chadha. senior credit officer at Moody’s.
A lot of people are still choosing to spend more on services. Last week, Uber said revenue jumped almost 50% last quarter. But Chadha said services spending could fall.
“Some of that strength is going to weaken as the consumer feels a lot more stressed,” Chadha said. “In terms of how much money they have in their pocket.”
That said, consumers will continue to spend as long as the labor market stays strong, according to Chadha.
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