The Federal Reserve no longer thinks a recession is going to happen, but it still expects an economic “slowdown.” Mastercard Inc. MA,
It begins with home-improvement chain Home Depot Inc., which reports quarterly results on Tuesday. Target Corp. and TJX Cos. report Wednesday. Walmart Inc. and Ross Stores Inc. round out the week on Thursday.
The quarterly financial figures arrive amid low unemployment but continued consumer difficulties, and not all economists are convinced the economy is out of the woods.
Inflation, though easing in some spots, is still hurting consumers. Savings are running thin. Analysts expect a big back-to-school season, with potential implications for the year-end holidays. But they’re worried about the coming return of student-loan payments — and the degree of large retailers’ exposure. Retailers have tried to realign their inventories so they’re stocked up with what people want. And they’ve fattened or propped up sales via price increases for essentials. But analysts have said they can’t rely on that tactic forever.
“Consumers are still spending but are under financial pressure and have been adjusting how much they buy while also shifting from goods to services,” Jack Kleinhenz, chief economist at the National Retail Federation, an industry group, said in a statement on Thursday.
“While job and wage gains have counterbalanced inflation, the stockpile of savings accumulated during the pandemic is dwindling and is no longer providing as much spending power as previously available.”
Still, the NRF said last month said it expected “record levels” of spending on back-to-school or back-to-college supplies. Consumers, the firm said, were looking to get an early start on the season. D.A. Davidson analyst Michael Baker also said that retail stocks could get a lift as the Fed backs off on raising interest rates.
“We remain constructive on the group with our overall view being that retail will outperform as the end of the rate tightening cycle comes into focus,” he said in a note on Wednesday.
The results from Home Depot HD,
This week in earnings
Along with the big-box retailers, tractor maker Deere & Co. DE,
The call to put on your calendar
Fashion-industry consolidation: Tapestry Inc. TPR,
The number to watch
Cisco results: Concerns about falling product orders and weaker tech demand hung over Cisco Systems Inc.’s last round of earnings. Ahead of the networking-gear giant’s fourth-quarter results, set for Wednesday, Synovus analyst Dan Morgan said he was focused on the prospect of a rebound, and whether Cisco’s transition into a more multifaceted company is still intact. “All eyes will be on how Cisco is progressing in transitioning from an old router/switch leader to a more diverse revenue mix in Security (Secure/Agile Networks), Internet (Internet for the Future), Hybrid Work, End-to-End Security, and Services,” Morgan said.