On corporate earnings calls, top executives are weighing in on the state of the consumer — in a good way.
Here’s what a few said in recent weeks, courtesy of The Transcript newsletter:
"Across the board, we’re seeing continued consumer strength" - Procter & Gamble (PG) CFO Jon Moeller
"Consumer and retail spending continues to be strong in the U.S." - 3M (MMM) CEO Mike Roman
"Consumer confidence is still reasonably high" - Hilton Worldwide (HLT) CEO Christopher Nassetta
Economic data backs up these comments. U.S. retail sales, a key measure of consumer spending tracked by the Census Bureau, rose 4.1% year-over-year as of September. The unemployment rate, as tracked by the Bureau of Labor Statistics, fell to 3.5% in September, the lowest level in 50 years, while average hourly earnings rose 2.9% year-over-year.
The next jobs report is released on Friday. Wall Street is expecting the addition of 93,000 jobs during the month, a slowdown from September’s 136,000. But the light expectations comes amid the recent General Motors (GM) worker strike. Even with this one-off weakness, Friday’s report provides another window into the strength of the consumer, which is highly correlated to the state of the labor market.
Looming consumer speed bumps
While the aforementioned executives remain largely upbeat about the consumer, some executives sounded the alarm about prolonged trade tensions affecting the consumer.
"If the tariffs and inflation persist, we feel like the more cash-strapped consumer will have to make some decisions, not much different than what we would face with rising fuel prices and ordinary inflation," said O'Reilly Automotive (ORLY) CEO Greg Johnson.
A new round of tariffs on imports from China, including tariffs on toys, are set to take effect on December 15, although there is ample time for the U.S. to delay or remove the round of tariffs completely.
Still, Hasbro (HAS) CEO Brian Goldner warned of possible price increases on consumers, in the company’s earnings call last week:
“if the December 15 tariffs were to go into effect, we would take pricing to again protect our gross margin and those price increases would be passed along to consumers.”
Scott Gamm is a reporter at Yahoo Finance. Follow him on Twitter @ScottGamm.
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