It's a tentative sort of anxiety. Large store chains such as Walmart, Home Depot and T.J.Maxx are steeling for a tricky year, given that shoppers have begun cutting back — but how much further? Some retailers, such as Best Buy and Macy's, are already feeling the slowdown.
More than a dozen retailers have dropped a flurry of financial reports in recent weeks. They have a broad view of consumer spending, which is a key driver of the U.S. economy. Here's what they say.
People are still spending, though stores' forecasts are cautious
Discounts during the holidays and a fairly warm January brought shoppers out to malls and department stores in a surprise shopping spree to start the year. Big-box and food giants — Walmart, Costco, Target, Kroger, McDonald's and others — reported growing sales thanks to higher prices on food and essentials.
McDonald's CEO Chris Kempczinski said the U.S. may see a "mild to moderate" recession and that U.S. inflation will continue but has likely peaked:
"Overall, the consumer, whether it's in Europe or in the U.S., is actually holding up better than what we would have probably expected a year ago or six months ago."
Arun Sundaram, who tracks many retail and food companies at the equity research firm CFRA, says companies were stung by the unexpected twists of last year, including soaring inflation and the war in Ukraine. So they want to set low expectations for another uncertain year.
Walmart CEO Doug McMillon cited "a lot of unknown unknowns" even as he forecast growth in store sales for the year:
"Customers are still spending money. ... It's obviously not as clear to us what the back half of the year looks like. ... We could tilt into a recession. We don't know what happens to consumer spending. We don't know what happens to layoffs, household income."
Food and beauty products are the splurges of the moment
Shoppers are being choosy (or "choiceful," as Walmart put it) as they buy fewer electronics, for example, spending that money instead on essentials. We heard this from Kohl's, Walmart, Target — and Best Buy, which forecast that 2023 will be the worst year yet for sales of computers and other consumer electronics.
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