Despite a rise in retail sales in July, analysts suggest that the US consumer is weakening, with most retailers expected to lower their guidance for late 2024. Inflation, particularly in shelter costs, is putting a strain on consumers, leading to a potential boost in housing liquidity if the Fed cuts interest rates.
Walmart's strong performance is attributed to market share gains rather than consumer strength. However, Home Depot's results indicate a pullback in discretionary spending.
July sales were likely boosted by Prime Day promotions at Amazon, Walmart, and Target, but June experienced weak retail growth. Lowe's also reported weak sales and cut its outlook due to reduced discretionary home spending.
Despite these challenges, Walmart's CEO remains optimistic about the stable consumer. The ongoing Q2 2024 earnings season has shown positive blended EPS growth for the S&P 500, but only 60% of companies have beaten revenue estimates.
Overall, the consumer is feeling the impact of high prices and inflation, leading to cautious spending decisions.
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