Slow but Steady

The slowdown in the economy to be relatively stable

Summary: There does seem to be some sort of slowdown in the economy but this week’s commentary seems to suggest that any slowdown is relatively stable. Still, consumer confidence is low. This is, perhaps, in part due to the fact that all eyes are on the US presidential election.

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Macro

American Express sees the US consumer as pretty consistent

"...while spend growth in certain categories was slightly higher or lower versus the prior quarter, overall spend growth was stable and we continue to see strong growth in the number of transactions from our card members, which grew 9% this quarter...So we feel that, look, the US consumer has been pretty consistent and we think it's going to be pretty consistent throughout the year." - American Express (AXP 0.00%↑) CFO Christophe Le Caillec

Manpower says labor markets remain solid

"...labor markets remain solid in many areas with relatively low unemployment and layoff activity. Our most recent employment outlook survey of over 40,000 employers this spring found that hiring confidence is holding steady at lower levels compared to a year ago as economic uncertainty continued to give employers pause and economies in Europe and North America are gradually cooling with inflation moderating. Many large enterprise clients are prioritizing hiring for the core skills they need and holding on to the skilled workers they have...We have seen underlying soft staffing trends broadly stabilize in North America and in Europe, with Asia and Latin America continuing to hold up well." - ManpowerGroup (MAN 0.00%↑) CFO Jonas Prising 

"...it is difficult to attract and retain qualified people in our plants, which is necessary to expand operating hours." - Insteel (IIIN 0.00%↑) President & CEO Howard O. Woltz

But consumer confidence is low

"In an uncertain economic and political environment, customer sentiment appeared slightly less optimistic than last quarter." - Comerica (CMA 0.00%↑) CEO Curt Farmer

"So the economic trajectory of vehicle repair is quite positive. It's an attractive place to be. But it's also clear that while the techs are busy and have cash, their confidence in the way forward is still poor. Every day, there's bad news." - Snap-on (SNA 0.00%↑) CEO Nicholas Pinchuk

"Accumulative effects of high inflationary pressure and high interest rates continue to negatively impact consumer sentiment. Although purchasing power of the US consumer remains relatively resilient." - AB Electrolux (publ) ($ELUXY) CEO Jonas Samuelson

"We continue to see a cautious consumer, evidenced by less card member spend with lower income households being most affected." - Discover Financial Services (DFS 0.00%↑) CFO John Greene

You are starting to see the lower-income consumer pull back

"...you are starting to see the lower-income consumer pull back a bit. They're rotating into non-discretionary categories. So it's clear that they're feeling the effects of inflation and they're managing to a budget." - Synchrony Financial (SYF 0.00%↑) CEO Brian Doubles

"To me, the best predictor of the future, even though I have a lawyer in the room, who probably tells me I can't say this, is what's happened. And you're right about consumer spending slow…And so that's what's going on in an economy where folks are kind of maybe struggling to decide what to buy." - Domino's Pizza (DPZ 0.00%↑) CEO Russell Weiner

The luxury market is struggling led by weakness in China

"...we are operating against a backdrop of slowing luxury demand with all key regions impacted by macroeconomic uncertainty and contributing to the sector slowdown. In this context, our Q1 full year 2025 comparable store sales fell 21%, and that compares with 18% this time last year." - Burberry ($BURBY) Chair Gerry Murphy

"The huge reduction in demand for luxury goods in China (including Hong Kong SAR and Macau SAR) and in the Southeast Asian markets, which are heavily dependent on Chinese tourists, had a considerable negative impact on sales and results due to the strong presence of the Group's brands in the region." - SwatchGroup ($SWGAY)

"All regions delivered growth except for Asia Pacific where sales contracted by 18%, as higher sales in South Korea and Malaysia only partially mitigated a 27% decline in China, Hong Kong, and Macau combined. The decline reflected both the low level of consumer confidence and the strong comparatives ranging from double-digit growth in the mainland to triple digits in Hong Kong and Macau over the prior- -year period." - Richemont ($CFRHF) 

43% of workers feel neutral or negative about AIs impact on their jobs

“Our surveys also tell us that 43% of workers feel neutral or negative about AI's impact on their jobs and futures." - ManpowerGroup (MAN 0.00%↑) CFO Jonas Prising

Capital markets still expect a soft landing 

"On the other hand, the environment in the U.S. remains relatively constructive. Markets continue to forecast a soft landing as the expected economic growth trajectory improves and equity markets remain near all-time highs." - The Goldman Sachs Group (GS 0.00%↑) CEO David Solomon

Conditions are conducive to a rate cut

"The labor market, resilient in the first half, is showing early signs of weakening. Similarly, latest inflation data shows further moderation, providing leeway for interest rate cuts in the second half" - Rio Tinto (RIO 0.00%↑)

Policy is still restrictive

"A restrictive stance of policy that we have in place is appropriate. I do think there is a decision ahead of us at some point to decide, not to get out of a restrictive stance of policy, but to lower interest rates in a way that lessens how restrictive policy is....I believe the time to lower the policy rate is drawing closer." - US Federal Reserve Governor Christopher J. Waller

Some Fed members still want to see September data before cutting rates

“We’re actually going to learn a lot between July and September...We’ve had a few months of encouraging data. It’s the kind of data I would like to see more of in the coming months…and if we get that…. I would find myself finding that greater confidence that inflation is moving sustainably to 2%" - New York Fed President John Williams

All eyes are on the election

"...there is a high level of geopolitical instability. Elections across the globe could have significant implications for forward policy. And inflation is proven to be stickier than many had anticipated" - The Goldman Sachs Group (GS 0.00%↑) CEO David Solomon

"...we find that many customers simply lack urgency, still prioritizing cost containment in light of an uncertain economic and political environment, both of which will be clearer soon." - Prologis (PLD 0.00%↑) SVP, Strategic Planning, and Analysis Timothy Arndt

International