Analyst says that Americans are more cautious.
Anyway you look at it, recent economic data shows, “Americans are being more cautious,” warns one strategist.
“When you keep hearing ‘recession,’ ‘recession,’ even if you have a job, you’re beginning to wonder by hearing this over and over again, when is it going to hit you,” LPL Financial Chief Equity Strategist Quincy Krosby told Yahoo Finance Live on Tuesday.
“Americans are being more careful and more judicious on how they spend,” she added.
Quincy Points to Consumers using their credit cards more frequently. Even spending a lot of money on vacations such as Disney.DIS) theme parks — a point of strength last quarter — could mean families are clipping costs elsewhere.
“That’s an expensive endeavor. Many Americans plan for that well, well in advance, so they’re going to cut elsewhere,” said Quincy.
Home Depot (HD) posted quarterly results showing a softening of consumer spending on home improvement compared to the pandemic boom.
The home improvement firm said that “demand has softened across all other business areas, including kitchens and bathrooms,” which may be due to the fact that consumers are moving away from large projects towards smaller ones.
New retail sales figures released on Tuesdayhowed an increase of 0.4% in April from the prior month. The figures have not been adjusted for inflation.
“If you adjust for inflation, you’re looking at a fairly soft picture when it comes to the US economy and the state of consumer spending,” Greg Daco, chief economist at EY-Parthenon told Yahoo Finance Live.
“They’re still spending more dollars because things cost more, but they’re buying fewer goods and services,” he added.
While these economic factors “points to a slowdown,” a resilient job market may be blurring the picture, said Quincy.
“When you have an unemployment rate of 3.4% , it’s hard to envision that a recession is right around the corner.”
Ines is an experienced business reporter with Yahoo Finance. Follow her on twitter at @ines_ferre
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