The Retailers Return – News for the American Consumer
With the abundance of news regarding inflation, interest rates, and the banking crisis, this upcoming week will be targeting the core of the U.S. economy: the consumer. In the next few days, the patterns of the American consumer will be able to be projected through April’s retail sales data and several retailers’ earnings reports. After the holiday-induced rises in January, retail sales steadily declined in both February and March, however, it is forecasted for April’s sales to rise 0.7% month-over-month. With inflation well below last year’s high, economists believe that average lower prices have allowed room for sales to grow slightly this year. The National Retail Federation has projected an annual retail sales growth between 4% and 6% for 2023, below 2022’s surprisingly higher 8.2% increase. With weaker credit conditions and uncertainty over the strength of the banking industry, it is assumed that demand may dwindle as the economy potentially heads toward a recessionary period.
Following the retail sales release on Tuesday, popular national retailers such as Target, Walmart, and Home Depot will be announcing their quarterly earnings. The previously combined weak guidance from several of these staple retailers depicts how cost cuts may not be enough to satisfy weakening demand. These earnings, when coupled with April’s retail sales data, will hopefully add to cohesive consumer spending trends, helping investors make calculated decisions when entering the markets. Anticipated weaker top-line revenues may signal the fiscally tight conditions of the American consumer, however, the opposite can depict how disinflation has positively decreased prices for staple goods. Nonetheless, the large retail figures will be followed by a new speech by Federal Reserve Chair Jerome Powell on Friday, optimistically providing more input on the behaviors of American consumers.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.