Recent earnings reports from major retailers suggest that U.S. consumer spending remained on a solid pace in the second quarter and into August, according to analysts from Mizuho.
Worries have swirled around whether Americans may be choosing to rein in expenditures or opt for cheaper options during a time of tariff-driven economic uncertainty.
U.S. retail sales increased at a rate of 0.5% in July, but cooled slightly from an upwardly-revised gain of 0.9% in the prior month, Commerce Department data has shown. While in line with expectations, retail activity has continued to face headwinds duriing the third quarter, particularly in the form of a weakening labor market and elevated goods prices.
But a series of comments from executives at large American retailers, including big box giant Walmart and home improvement chain Home Depot, may indicate that shoppers in the world’s largest economy are "feeling good," the Mizuho analysts led by David Bellinger argued.
"The consumer is alive, well, and still spending," the analysts wrote.
At Walmart, executives said that they see consumer behavior as "generally consistent," adding that there have yet to emerge any "dramatic shifts" because of the tariffs. Instead, the levies have had a more "gradual" impact, leading to "more adjustments in middle and lower income households" than higher income ones.
First-half sales at Home Depot were also boosted by momentum that began in the back half of 2024, executives at Home Depot said, as customers engaged "more broadly" with smaller home improvement projects. Peer Lowe’s said that homeowners remain "financially healthy" as well, fueling forecasts for better performance from the business "through the year."
Management at Dick’s Sporting Goods -- whose items have been especially exposed to sweeping U.S. tariffs and have begun to see some uptick in pricing as a result -- told analysts that they too are not seeing "any signs of slowdown with the consumer."
Best Buy, which specializes in selling popular electronics like televisions and computers, said there has not been a "material" change in consumer habits either -- although many shoppers are more "deal-focused" and attracted to "more predictable sales moments."
Dollar General, who focuses on providing bargains to cost-conscious shoppers, said consumers have been "resilient" and "seeking value." Customers have noted a "good start to the third quarter," they added.
The Mizuho analysts said the quarter-to-date commentary "rang constructive," even as risks remain in the second half "as tariff costs phase in [...] more." They retained an "optimistic view" of U.S. retailers, they said.
Walmart and Lowe’s both saw their "outperform" ratings retained by Mizuho, while the brokerage kept its "neutral" outlook for Target, Advanced Auto Parts and Leslies’s (NASDAQ:LESL).
Source :
https://www.investing.com/news/stock-market-news/us-earnings-season-showed-consumer-is-feeling-good-mizuho-says-4218131
