Not Falling Off a Cliff

The consumer has been resilient, even though consumer sentiment is fragile

Summary: The macro economy is on a more stable footing than it was a couple of months ago. The consumer has been resilient, even though consumer sentiment is fragile. The AI revolution continues. Don't bet against technological progress.

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Macro

Macro is not falling off a cliff
"When we came into the year, we were expecting a macro environment that was improving. We certainly can't have a macro environment that falls off a cliff necessarily, and that's not our expectation. And then we're not seeing that just to be clear." – CSX (CSX 0.00%↑) CFO Kevin Boone

The consumer is resilient
"Despite the noise in the headlines and broader economic uncertainty, our customers continued to show resilience in Q1. We haven’t seen any signs of a demand slowdown. In fact, customers were eager for fresh spring fashion – and our teams delivered." – Urban Outfitters (URBN 0.00%↑) CEO Dick Hayne

"It's clear that the consumer in general is pressured by the geopolitical and economic environment. And we see that in consumer sentiment surveys in the US, in China, in the UK. When it comes to our core consumer, which, as you know, are more elevated consumers, they have remained resilient." – Ralph Lauren (RL 0.00%↑) CEO Patrice Louvet

"Overall, we see both consumers and small businesses remaining financially healthy and resilient. True whether you look at cash buffers, spend, or credit metrics. Also, generally true across income segments for consumers and for smaller businesses too. However, what has definitely worsened is consumer confidence since more business sentiment, but it is too early to see any transmission to real customer behaviors yet." – JPMorgan Chase (JPM 0.00%↑) CEO Consumer & Community Banking Marianne Lake

Consumer sentiment remains fragile, though
"Generally speaking, I would say consumers are very steady state these days. They deteriorated pretty dramatically when the stimulus was withdrawn way back toward the end of COVID. And though they have improved since then, they're not sort of back to what we would consider to be a normal long-run state. We have this way of measuring it. We call the Upstart macro index. And it has improved, but it's still what we would consider to be elevated, meaning there is significant risk priced into our loans." – Upstart (UPST 0.00%↑) CEO Dave Girouard

"So here's what I would say is, I think right now, as we've all seen, consumer sentiment is relatively low. And the consumer has had some anxiety. That's come along with obviously all the news in the marketplace and the uncertainty." – Whirlpool (WHR 0.00%↑) EVP James Peters

"We faced several additional headwinds this quarter, including 5 consecutive months of declining consumer confidence, uncertainty regarding the impact of potential tariffs and the reaction to the updates we shared on belonging in January." – Target (TGT 0.00%↑) CEO Brian Cornell

There are some concerns about fiscal policy
"The markets are watching the fiscal policy...Everybody I've talked to in the financial markets they're staring at the bill, and they thought it was going to be much more in terms of fiscal restraint, and they're not necessarily seeing it. And therefore, there's going to be a lot of issuance of Treasuries. And in order for them to buy these things, they want it at a lower price, and therefore, a higher yield." – Federal Reserve Governor Chris Waller

The Fed may cut rates once this year
"For me right now, I'm expecting it's going to take a bit longer for that to sort out. ... I'm leaning much more into one cut this year, because I think it will take time, and then we'll sort of have to see...I worry a lot about the inflation side, and mainly because we're seeing expectations move in a troublesome way. ... That will make our job harder." – Atlanta Fed President Raphael Bostic

No one is really expecting cuts, though
"We don't assume any improvement. We don't assume rates are going down. We don't assume the macro changes in any significant way. But we feel, I would say, pretty comfortable where it sits right now." – Upstart (UPST 0.00%↑) CEO Dave Girouard

International