Wild Card
"The war in the Middle East is a wild card...we’ll just have to wait and see."
Summary: The economy remains resilient, and consumer spending continues to grow at a solid pace. War with Iran has become a wild card for the global economy, though. 20% of global oil comes through the Strait of Hormuz, which means that this could become the largest oil shock in history. Markets are relatively calm, but that calmness will depend on how long this conflict continues.
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Macro
The economy remains broadly resilient
“Obviously, here recently bias in the last 2 weeks, all eyes are on the Middle East and implications there, how quickly that gets resolved. Notwithstanding that, we see the economy still as broadly resilient. There’s some mixed signals that you have to really pay attention to, but broadly resilient.” – Citizens Financial Group (CFG 0.00%↑) President & Head of Consumer Private Banking and Wealth Brendan Coughlin
Consumer spending continues to grow at a solid pace
“So on the consumer clients, they’re still spending at a 5% year-over-year rate. It’s about equivalent to last year. If I just broke it down to debit and credit at about 5% to 6%, which is just a little bit higher, and you’re seeing more spend on entertainment and travel than you did last year, just to tick up.” – Bank of America (BAC 0.00%↑) Co-president Dean Athanasia
“...we’re continuing to see the resilience of the consumer. We’re continuing to see healthy consumer spend, amidst a backdrop that might be more volatile. And when you look at the consumer and their purchasing power, it’s very much a function of wage growth. And wage growth has been exceeding inflation. And so that’s empowered the consumer and created more purchasing power for the consumer...And so generally continuing to see a very stable and healthy consumer.” – Mastercard (MA 0.00%↑) President of the Americas Linda Kirkpatrick
“Starting with the consumer, no major change to what we’ve discussed in recent times. There’s a stronger overall consumer base in North America than we have elsewhere in the world.” – Coca-Cola (KO 0.00%↑) President & CFO John Murphy
“Demand remains strong and consistent across the portfolio, across all categories, apparel, food and beverage, experiential, entertainment, and the like. We’re coming off a record year, as I mentioned, ‘25, and that momentum has continued in the beginning of ‘26, and we look forward to it continuing.” – Simon Property Group (SPG 0.00%↑) COO, EVP & Director Eli Simon
There are some worries about job markets
“On the employment front, consumers who had previously felt secure in their jobs are now questioning that security as technology-driven disruption, particularly the rapid advance of and constant news coverage of artificial intelligence, raises important questions about the future of our workforce.” – Lennar (LEN 0.00%↑) Executive Chairman & CEO Stuart Miller
But balance sheets are healthy
“They still have a lot of deposits. They have greater than 13% deposits, more than they had in pre-COVID. So they are still in good shape, still spending. And so as far as we can see, the asset quality is still good” – Bank of America (BAC 0.00%↑) Co-president Dean Athanasia
War in the Middle East is a wild card
“...and it goes without saying that the war in the Middle East is a wild card. It might end quickly, and the world is a better and safer place, or it might trigger higher gas prices, higher inflation, and higher interest rates, and we’ll just have to wait and see.” – Lennar (LEN 0.00%↑) Executive Chairman & CEO Stuart Miller
Inflation could move higher
“The outlook has since changed after the war broke out in Iran. The world’s most critical oil and chemical supplier region has suffered intense military attacks, leading to supply interruptions. Inflation, which was already sticky, may move even higher, and the economic outlook has become very uncertain.” – Bimini Capital Management (BMNM: OTCPINK) Chairman & CEO Robert Cauley
“This uncertainty layers onto already strained household budgets and has made consumers more hesitant to commit to large purchases, particularly homes. Traffic has remained reasonably consistent across our communities, but the urgency to transact remains measured.” – Lennar (LEN 0.00%↑) Executive Chairman & CEO Stuart Miller
