The US consumer has befuddled me the past two months.
Consumer company earnings reports have come in reasonably well — see solid results from Procter & Gamble (PG) and American Express (AXP) last Friday. The stock market is trading at record highs. Economic data such as retail sales paints a picture of a resilient US shopper, not one falling off a cliff.
“I would describe the situation right now as stable,” P&G CFO Andre Schulten said on Yahoo Finance’s Opening Bid (video above). “Consumption in our categories is still a bit muted versus what it used to be. So the category is growing around 2% to 3% versus the historic level of 3% to 4% across our portfolio of categories.”
He added, “We see the bifurcation that we’ve been mentioning before, so you have some consumers looking for value in larger pack sizes … And then you have some level of consumers that are looking for value in smaller pack sizes. They’re looking for smaller cash outlays and promotions.”
The surprising consumer resiliency led me to ask two simple questions in my Sunday Morning Brief newsletter: Why is it happening, and what am I missing?
Here are several responses I received directly from the Yahoo Finance community via email, on X @BrianSozzi, and LinkedIn. Loved the insight — keep it coming!
Energy is not the high percentage of people’s expenditures that it was in the 70s and 80s. Household net worth continues to blow the doors off of all stats. Finally, the policies of the third best President in our history along with his strong leadership just reinforces said previous items.
—Joseph McShane
I read your article about consumers confusing you. There is nothing confusing — please see the forest for the trees:
1) The bottom of the K curve is really hurting. Really hurting. As someone who had cancer (2 times) move me from the top side of the K to the bottom, I can tell you it is devastating. But, when inflation is high, revenue goes up because even poor people have to pay rent, buy food, clothe the kids, etc.
2) The top of the K curve is oblivious. One of my best friends has been laid off 3-4 times in the last 5-7 years. Each time he gets a $75,000 check, he has got a pile of money from his parents’ estate. He has never felt pain. When you roll double 6s every time, you begin to think you are good even though it is really luck. The last time he got laid off was 2 weeks ago. You know what he did the next day? He booked six trips, including a month in Italy. And this isn’t a private equity guy, venture capitalist, etc. just a boy from a family with a little money who chose the right field at the right time (advertising sales in TV and internet the last 30 years).
