On this Labour Day weekend, I want to thank everyone working so hard to understand the US economy and figure out what it might mean for stocks in the coming months.
It’s a challenging job, and you don’t get much in the way of direction on how to handle the challenges that come your way day after day. You will, however, receive feedback similar to that of a boss; therefore, choose your stocks carefully.
I’ve been putting in extra hours to learn more about where consumers stand right now and what the future holds for the economy. Inflation is going down, said the headlines. But executives at discount shops tell me that people are switching from expensive deli meat to cheap canned tuna fish because of inflation.
It seems that teenagers are purchasing expensive Abercrombie & Fitch clothing, but the parents of same teenagers choose to split a dinner rather than get a single serving of soup in an effort to save money.
Another thing that is undoubtedly widespread is the fact that customers are actively looking for ways to make their dollar go further. Because of this, individuals are more likely to purchase what are known as “more stretchable meals.” Consider buying spaghetti and pasta sauce, rice, condensed soup, or even broth as examples of these types of purchases. Other examples include anything that allows you to increase the total number of servings.
While these “stretchable” meals have become more popular, single-serving categories like a can of ready-to-eat soup have come under increased competitive pressure.
What crazy thoughts!
This week, more wild predictions came out about a customer most investors think is doing well. A few:
Executives at HP Inc. said this week that people still don’t buy computers because they are too expensive and they need the money for other things. Could it be soup?
This week, executives at Best Buy pointed out that more people are not paying their credit card bills, just like Macy’s and Nordstrom did last week.
Chewy said on its earnings call that it sees more “discerning” buyers.
Soup in cans that cost less. One bone less for your dog. A back-to-school uniform purchased from TJX’s Marshall’s department store rather than Macy’s.
The United States consumer is currently (an inflation-fighter) and will likely remain during the critical holiday buying season.
It remains to be seen whether shareholders recognise the significance of this development and reevaluate stock prices.
Keep this fact in mind as you go about your day, and remember to read today that the economy created a “solid” amount of new employment in August. More is going on than what the title says.
