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Some of America's Biggest Companies Flash Warning Signs

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  • Consumer wallets will be hit hard in the second half of 2022.
  • This is a lesson from America’s top corporate leaders.
  • This suggests a heavy blow to the US economy as costs continue to rise and consumers feel squeezed.

Walmart is cutting back on grocery shoppers. AT&T customers are paying their bills later than usual. At Best Buy, demand for electronics has slowed dramatically.

Unemployment remains at a historically low level and consumer spending continues to grow, albeit at a slower pace, but the second quarter earnings commentary shows troubling signs for the US economy.

Large companies often paint a grim picture of the future of the economy.

Walmart sounded the alarm on Monday about how consumers can no longer afford anything other than basic groceries. soaring prices are affecting consumer spending.

Unilever, the parent company of Dove Soap and Ben & Jerry’s, was added to the picture on Tuesday. No, suggesting that consumers will continue to face higher prices.

“The threat of a recession is starting to affect consumer confidence, and consumption patterns and behavior are starting to change,” Jope said.

Then, on Wednesday, Best Buy jumped in, showing that customer interest in electronics has slowed.

“Amid continued high inflation and deteriorating consumer sentiment, consumer demand in the consumer electronics industry weakened further and second-quarter results fell short of expectations we shared in May,” CEO Corie Barry said in a release. I’m here.

Even companies like McDonald’s and Costco, two places consumers typically rely on for low prices, have started raising prices. did. The fact that Costco has increased the prices of chicken bakes and sodas shows that Costco is immune to inflation.

Meanwhile, some consumers are starting to struggle to pay their phone bills, and AT&T says it’s seeing an increase in later payments from customers.

Retailers aren’t the only ones sounding the alarm. Social media companies and tech giants have also been hit by expectations that consumer spending could stall in the coming months. As companies cut costs in anticipation of slowing growth, they often shrink their advertising spend, which is a major source of revenue for companies like Snap and Meta.

Last week, Snap warned investors that it expected growth to slow in the coming months for exactly this reason.

“A combination of macroeconomic headwinds, changing platform policies, and increased competition are limiting campaign budget growth,” Snap said in a letter to investors.

Similarly, Facebook’s parent company Meta highlighted rising inflation and the possibility of an imminent recession as business challenges.

Headline inflation reached an 8.6% y/y pace in July. This is his fastest speed since 1981. Inflation may be showing signs of peaking, but price increases are likely to continue for years to come, experts say. Moon.

And there is growing evidence that the pandemic is starting to erode savings for many. Credit card balances have grown by $71 billion over the past year, and in April his personal savings rate fell to its lowest level since 2008. consumer.

One piece of good news: With global supply chains finally catching up to the tremendous consumer demand seen earlier this year, some department stores like Target are selling certain products like loungewear, home goods and electronics. overflowing with Consumers may find more bargains as stores attempt to ditch their bloated inventory.

But there’s a reason these products are discounted. Consumers don’t want them – shifting their demand from goods to services. And with inflation affecting everything from food to gas to housing, discounting here and there is unlikely to make Americans feel better about the economy.