Counting on Cuts

Companies are optimistic but are looking for the Fed to lower rates

Summary: Consumers continue to show strength and the economy is stable, but lower interest rates have not yet created a noticeable change in the macro environment. Companies are optimistic but are looking for the Fed to lower rates more in order to boost the economy. Everyone is relieved that the election will soon be over.

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Macro

Consumers continue to show strength
“In the U.S., total payments volume grew 5% year-over-year, in line with Q3... Consumer spend across all segments from low to high spend has remained relatively stable to Q3. Our data does not indicate any meaningful behavior change across consumer segments from last quarter.” – Visa (V 0.00%↑) CFO Christopher Suh

“I mean the consumer continues to be healthy. We continue to see positive trends from a consumer health standpoint. They’re spending in a very healthy manner... there’s no doubt in my mind that the consumer continues to show strength.” – Mastercard (MA 0.00%↑) CFO Sachin Mehra

Some consumers remain under pressure
"There's no doubt about that. I mean, I think consumers are under pressure... I think consumers continue to be discerning with where and with whom they're spending money... certainly lower-income consumers and families are consumers that are under more acute kind of pressures." – McDonald's (MCD 0.00%↑) Global CFO Ian Borden

Interest rate cuts have yet to have positive effects
“You know from the start of Q2 to the end of Q3, we really haven't seen a noticeable change in the macro environment. The recent interest rate drop by the Fed and China's stimulus announcements has yet to create positive ripple effects through improved certainty.” – IDEX (IEX 0.00%↑) CEO Eric Ashleman

Mortgage rates are still high
“Before I expand further into the results, I want to acknowledge what has been and will, at least in the near term, remain a challenging macro environment in the U.S. Consumer confidence remains low and is impacted by the uncertainty ahead of the upcoming elections. Despite the recent interest rate cut by the Fed, the U.S. housing market is still constrained by elevated mortgage rates.” – Whirlpool (WHR 0.00%↑) CEO Marc Robert Bitzer

“While mortgage rates have decreased from their highs earlier this year, many potential homebuyers expect rates to be lower in 2025. We believe that rate volatility and uncertainty are causing some buyers to stay on the sidelines in the near term.” – DR Horton (DHI 0.00%↑) CEO David Auld

More rate cuts are needed
“We expect choppy markets will extend into the front half of next year until interest rate reductions have a greater effect and the U.S. election result is known and settled.” – Black and Decker (SWK 0.00%↑)

The presidential election hasn't helped
“An extremely close U.S. November election with polarized outcomes also isn't helping in the near-term.” – IDEX (IEX 0.00%↑) CEO Eric Ashleman

“Consumers remain trepidatious in their spending patterns and are demonstrating more price elasticity than we saw in the early months of the year... we were seeing a broader pullback by shoppers in the lead up to the election.” – Wayfair (W 0.00%↑) CEO Niraj Shah

No evidence of a looming recession
“We do not see evidence of a looming recession in the decision-making of our clients. While it is true that long-term interest rates driven more by market forces than Fed behavior have recently been rising, many corporations, particularly smaller ones, use floating rate and shorter-term financing, which are becoming less expensive.” – Boston Properties (BXP 0.00%↑) CEO Owen D. Thomas

International