The Washington Post writes that, in the absence of official government data because of the current shutdown, people and institutions are casting about for dependable barometers of “the true state of the American economy.”
To be clear, the Post writes, “The United States is not in or even near a recession, despite what your grocery bill feels like. But the economy is in an uncertain place, with a number of signs of weakness that economists are monitoring.” Here are six of them:
• “Cardboard boxes power the consumer economy. They not only bring joy in the form of online shopping purchases, they are literally how retailers move goods. When cardboard box production slows, it could be a sign that people are expected to buy less in coming months. And cardboard box production is down.”
• “Hamburger Helper sales have bumped up significantly this year, according to parent company Eagle Foods, as people seek out deals on groceries. For decades, people have turned to the packaged pasta-and-seasoning meals when times are tight — or, as social media users have been embracing this year, ‘struggle meals’.”
• “Sales of huge trucks have been falling this year. We’re not talking about America’s darling, the Ford F-150s, but huge semi- and similar trucks — the type that are meant to move goods and supplies around the country. If there isn’t as much demand for those big trucks, that signals industrial activity could be slowing. A steep drop-off in sales has often preceded recessions.”
• “Browsing and buying at thrift stores has gotten steadily more popular in the past few years, partly to save some money and partly to score luxury goods at low prices. That shopping has boomed this year, fueled by shoppers seeking budget deals … ThredUp, a popular app where people can sell their used clothing, posted a 16 percent boost in sales during its second quarter of the year. Similar apps have seen a bump as tariffs start to take hold, making it more expensive to buy some new clothes and accessories.”
• “Americans are feeling stuck in their jobs, as the number of job openings in the country stays stubbornly low. Hiring has slowed to a crawl this year, with employers adding 88,000 jobs during the summer … The rate of people quitting their jobs is at the lowest level it’s been since the pandemic-fueled recession of 2020. That suggests that people are unable to find new positions or reluctant to risk a move in an uncertain labor market.”
• “Home renovations are popular this year, with home equity loan originations jumping 12 percent during the first quarter. As home values have risen, people are borrowing against their most valuable asset … One of the main reasons to take out a home-equity loan is to remodel your home, an option people are turning to this year because it is expensive and difficult to buy a new home, with mortgage rates still elevated and new homes stagnant on the market. People also take them out to lower their overall debt interest rates.”
KC’s View:
Of course, there could be other reasons for these trends. For example, it could be that oversupply in the past is leaving everyone from cardboard box suppliers to truck manufacturers to cut back on their current production.
But as we all know, while the country may not technically be in a recession, it remains entirely possible that many people have a recessionary mindset. That’s what happened in the last presidential election – no matter how much the incumbent told people that things weren’t that bad (which they objectively weren’t), it didn’t jibe with many people’s personal experiences, which prompted them to vote for a candidate promising lower prices.
Retailers would be well advised to pay attention to the signs, and to find ways to give consumers as many wins as possible, and be transparent about the reasons behind price increases. You have to own the narrative, not allow it to unfold on its own.
Just sayin’.
One more thing.
CNBC is reporting today that “as the peak holiday shopping season approaches, most U.S. consumers have a downbeat outlook on the economy, according to an annual Deloitte survey published on Wednesday.
“Most consumers surveyed — 57% — said they expect the economy to weaken in the year ahead, the consulting firm found in a poll of roughly 4,000 respondents. That compares to 30% who expected a weaker economy ahead of the year-ago holiday season and 54% in 2008, one of the years of the Great Recession.
It marks the most negative economic outlook since Deloitte began tracking that in 1997.
“Seventy-seven percent of people surveyed said they expect higher prices on holiday items, up from 69% last year, according to Deloitte. It’s the first holiday season since President Donald Trump’s latest wave of tariff hikes on many imports.”
Retailers should expect these shifting mindsets to affect consumer behavior in coming months, and adjust accordingly.
The post Six Potential Signs Of US Economic Weakness appeared first on MNB.
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