A Tale of Two Economies (Part I)
Daily Data: Cautious consumerism abounds
First day back and already a scheduled post snafu . . . I scheduled it for 6:30pm, instead of 6:30am. I was pretty tired.
In today’s dispatch:
cautious consumerism abounds
from coffee to fast-food to tchotchkes on the internet
expenditures growing faster than earnings
👉👉👉Reminder to sign up for the Weekly Recap only, if daily emails is too much. Find me on twitter, for more fun. A Tale of Two Economies (Part I)
Allow me to distill a weeks+ worth of earnings announcements from some of the biggest, most important companies in the world into just two short posts (one today, and one tomorrow) befitting both my level of fatigue and your attention span.1
Tl;dr it continues to be a tale of two economies.
On the one hand, you have the increasingly cautious Almighty Consumer.
While low-end service workers and their rising wages continue to drive consumption, those wages and prices are running together—not in a “wage price spiral” thingummy, but in a “you can’t have your wages and eat them too” kind of way.
It’s true that both wages and prices are not growing as quickly as they used to, but then it’s also true that the Almighty Consumer has very little margin for error.
As a result, unlike the Finance Bro era of yore, the National Nursing Home era is more bargain-hunting, than splashy largesse.
On the other hand, you have AI is the Capital Cycle Now.
Consumers might be carefully watching their spend, but enterprises are pouring boatloads of capital into AI or AI-adjacent investments. You love to see it.
That does appear to be the only thing they are pouring boatloads of capital into, however, as best as I can tell.
Great news for cloud, enterprise AI, data centers, data center components and cooling, etc.
Part I is clips n’ phrases regarding the first hand. Part II will be clips n’ phrases regarding the other hand.
The Cautious Almighty Consumer
A quick rundown of the quotes from some of the biggest names in consumer goods and services:
Starbucks took a header on same-store sales despite higher prices (and not just in China):
7% decline in comparable transactions is steep. SBUX 0.00%↑ has been punished accordingly.
From Starbucks CEO, Laxman Narasimhan:
“Headwinds discussed last quarter have continued in a number of key markets, we continue to feel the impact of a more cautious consumer, particularly with our more occasional customer and a deteriorating economic outlook has weighed on customer traffic and impact felt broadly across the industry. . . a more cautious consumer may persist longer . . . the underlying pressures that we see consumers face, just in terms of what they have available to spend.
McDonald’s undershot same-store sales expectations, as well. From CEO Chris Kempczinski:
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