Cautious consumerism remains the new normal

Because why would it not?

• ‘cautious consumerism’ is the new normal (a theory), and that’s not so bad

• retail sales ‘beat expectations’ (because of mega-discounted cars)

• what does the credit card data say? how about the app data?

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Cautious consumerism remains the new normal

Womp-womp. Big sell-off yesterday. No surprise.

At least one piece of the bigger story remains directionally correct.

The cautious consumer finds discounts online and uses credit when available (which is more often than before)

Random Walk posited over a year ago that we were entering the Donna Summers phase of the consumer economy.

• Stimmy and ZIRP tailwinds gone, consumers would have to work hard for their money.

• White Collar Stagnation, plus the Labor Shortage premium to lower-income workers, would turn us all into value consumers—basically, squishing higher income and lower income shoppers together (relative to before). You might even call it ‘Hey, Small Spender’ or more diplomatically a “broadening of the middle class.”

• the high cost of services (including service shrinkflation), plus the growing heft of value-consumerism, would comprise a tailwind for ecommerce, aka Buying Cheap Tchotchkes on the Internet;

• put that together with the increasing sophistication and reach of consumer credit products, and behold, the BNPelle of the Ball.

That’s pretty much how it’s played out.

Consumers have been “cautious” and discount-focused, while e-commerce (and BNPL) has been a booming bright spot for otherwise middling retail growth.¹ And, at the other end of the spectrum, high end discretionary (and high touch services) continue to flounder, more or less.

There have been some shimmies and shakes (e.g. around the holiday shopping season), but with yet another census retail sales report in the bag, ‘cautious consumerism’ is, for all intents and purposes, the new normal.

Retail sales beat expectations (because of discounted cars)

So how did the Almighty Consumer do?

Pretty OK:

Bloomberg

Retail sales “grew more than expected” the headline says.

Sure, but it was driven by auto sales (that were themselves driven by heavy discounting), but still pretty OK.

And, of course, e-commerce did well, as per usual.

Fast Casual > Fine Dining

What about high touch services?

Well, to take one example, casual dining continues to get hammered (while QSR and Fast Casual attempt to pick up the slack):