“There are signs of softness, and if that continues, then the consumer may not be able to spend as much as they have been in the past.” – 02:38
Bea Chiem, Retail & Consumer Managing Director of S&P Global, joins J.D. Durkin to discuss the recent report from the New York Federal Reserve, which indicates that consumers have raised their inflation expectations while simultaneously feeling more optimistic about their taxes and personal financial situations. This optimism comes on the heels of a robust June retail sales report, where Americans spent an impressive $720 billion, despite facing challenges such as reciprocal tariffs and higher-than-expected core inflation.
Bea provides her analysis of the June retail sales data, noting a month-over-month increase of six-tenths of a percent. She highlights that while consumers are still spending, there are signs of potential softness in the market, particularly as unemployment remains stable but job gains are weaker than anticipated. This could impact consumer spending moving forward.
In the context of the ongoing earnings season, Bea shares insights from major companies like Procter & Gamble and McDonald’s, which indicate a cautious outlook on consumer spending. Higher-income consumers are also looking for value, and companies are navigating the delicate balance between passing on tariff costs and driving sales through promotions.