Considering three years of economic upheaval that have driven up prices and consumer resentment, consumer spending could be worse. <\/p>\n
When the nation\u2019s biggest retail chains report this week \u2014 Walmart Inc., Target Corp. and Macy\u2019s Inc. \u201cOur macro view is one of caution at the low end consumer and within the U.S. wholesale channel, department store and outlet channel into Spring\/Summer \u201924,\u201d TD Cowen analyst John Kernan said in a note last month. <\/p>\n Lower-income consumers have been hit harder by rising prices for basics. And those higher prices overall have made customers more selective when they spend on things they want rather than things they need. Higher energy prices and borrowing costs, as well as stricter credit conditions and the return of student-loan payments, have also posed threats to demand. <\/p>\n UBS analysts, in a research note on Thursday, said that within so-called softlines retail \u2014 that is, things like clothes \u2014 retailers were still cutting prices in an effort to clear items that shoppers don\u2019t want. <\/p>\n \u201cIt\u2019s getting worse,\u201d read part of that note\u2019s headline. <\/p>\n \u201cOur view is the market underestimates the pressure on industry sales from U.S. consumers\u2019 decreasing ability and willingness to spend on apparel and footwear,\u201d the analysts continued. <\/p>\n \u201cWe expect sales trends to weaken over the course of 4Q23 (link),\u201d they said. \u201cPlus, new October data increases our conviction companies will experience more gross margin pressure than the Street forecasts because it shows discounting increased (year-over-year) and inventory levels reached a new peak.\u201d<\/p>\n Home-improvement retailer Home Depot Inc. However, consumer-traffic analytics firm Placer.ai found that foot traffic fell in the third quarter for those three retailers, as well as BJ\u2019s Wholesale Club Holdings Inc. \u201cOne takeaway from the data is that the screws do appear to be tightening on American consumers as visits to most of the retailers mentioned are down year-over-year,\u201d the firm said in an email. <\/p>\n Still, the National Retail Federation, an industry group, said it expected record spending during the holiday season, which it defined as Nov. 1 through Dec. 31. The group said it expected a sales increase of between 3% and 4% to a range of $957.3 billion to $966.6 billion.<\/p>\n This year\u2019s holiday season will follow 2021\u2019s supply-chain backups that pushed up shipping costs, and a wave of discounts last year as those backups, coupled with a shift in demand toward basics after the war in Ukraine initially drove up food prices, forced many shoppers to prioritize basic necessities. But Jack Kleinhenz, the NRF\u2019s chief economist, said despite the pressures on shoppers, some government data showed consumers had more pandemic-era savings than once thought. <\/p>\n \u201cWhile there is significant uncertainty surrounding the measurement of how well the economy is performing, it continues to move forward and defy recession predictions, proving it to be more resilient than anticipated,\u201d Kleinhenz said in a statement on Wednesday. <\/p>\n \u201cI expect the recent rhythm of spending will continue into the holiday season and that consumers will continue to spend on a range of items and experiences but at a slower pace,\u201d he continued.\u00a0<\/p>\n Adobe expects U.S. shoppers to spend a record $221.8 billion online over the holiday season, helped by holiday discounts. Vivek Pandya, lead analyst for Adobe Digital Insights, said that while customers were on firmer footing than last year, they could sacrifice higher-priced faster shipping options, cram more of their shopping into big discount days, and turn to buy-now-pay-later services to get what they need for the holidays. <\/p>\n Other retailers, like TJX Cos. Still, TJX recently said it would close a handful of stores, according to reports. And Target, in September, said it would close nine locations, citing theft, an issue that has become a bigger topic on earnings calls this year, amid reports of bold and sometimes violent heists. But with it have come more questions on how much the data backs up executives\u2019 complaints. <\/p>\n Elsewhere, Advance Auto Parts Inc. Twelve S&P 500 companies, including three Dow 30 members, report this week, according to FactSet. <\/p>\n Tyson Foods and food prices:<\/strong> Food prices have stayed elevated over the past year, and Tyson Foods Inc., the large poultry and beef producer, could offer more color on those trends when it reports quarterly results on Monday. The company, after raising prices last year, in August reported a decrease in prices for pork and chicken. But consumers are still struggling to keep up, and the company is closing some plants in an effort to cut costs. Media outlets in September also reported that Tyson
\n M,
\n
\n are among them \u2014 executives could help further dissect what has been called the \u201cbad vibes\u201d economy, as the holidays approach, Wall Street remains skeptical and signals across the retail industry remain mixed. <\/p>\n
\n HD,
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\n reports results on Tuesday, as a tight supply of available homes, higher prices and mortgage rates continue to raise questions about homebuyer demand. Target
\n TGT,
\n
\n reports Wednesday, as more-expensive essentials leave its consumers with less room to spend outside the grocery section. Walmart
\n WMT,
\n
\n which reports on Thursday and sells more groceries, has fared better with investors, and the company has said it has attracted both higher-income and lower-income shoppers seeking cheaper options. <\/p>\n
\n BJ,
\n
\n which reports Friday. <\/p>\n
\n TJX,
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\n \u2014 the owner of T.J. Maxx and Marshalls stores \u2014 Bath & Body Works Inc.
\n BBWI,
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\n Gap Inc.
\n GPS,
\n
\n and bargain clothing chain Ross Stores Inc.
\n ROST,
\n
\n also report during the week. In August, Ross Stores, which draws a lot of low and middle-income shoppers, cited \u201ceasing inflationary pressures.\u201d <\/p>\nThis week in earnings<\/h2>\n
\n AAP,
\n
\n reports results, after S&P Global Ratings in September downgraded the auto parts retailer\u2019s credit to \u201cjunk\u201d and said it believed the company had given up market share amid strategic missteps. Warner Music Group Corp.
\n WMG,
\n
\n and Applied Materials Inc.
\n AMAT,
\n
\n also report.<\/p>\nThe call to put on your calendar<\/h2>\n
\n TSN,
\n
\n and Perdue Farms faced a Labor Department investigation after a New York Times Magazine report on migrant children working at their plants. Representatives for both companies said they would cooperate with investigators, according to the New York Times. <\/p>\nThe numbers to watch<\/h2>\n