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 What Recent Earnings Reveal About the State of the US Consumer

Key Takeaways:

• Consumers remain resilient but cautious, focusing on essentials and discounts.

• Retailers like Walmart and Target report strong traffic, but shoppers trade down and hunt bargains.

• Discount and dollar stores see rising demand as buyers seek value.

• Big purchases slow: Home improvement and travel earnings flagged weaker spending due to high prices and interest rates.

• Bankers say overall spending is solid, yet mostly driven by higher-income households.

Introduction: Reading the Signals in Company Earnings

In 2025, the American economy is powered largely by consumer spending. When big companies report earnings, investors and analysts listen closely for clues about shoppers’ behaviour. Recently, firms from Walmart to McDonald’s have given mixed signals. On the one hand, headline sales figures often beat forecasts, suggesting Americans are still shopping and spending. On the other hand, company leaders frequently warn of softer demand and careful customers.

At first glance, the economy looks steady. Retail sales and consumer spending data have held up reasonably well. Many households feel more confident and have jobs, even as inflation remains above the Federal Reserve’s 2% target. But rising prices and interest rates are squeezing budgets. Mortgage and loan costs are high, so buyers may delay big purchases. Against this backdrop, recent earnings calls have become a crucial way to gauge the state of the US consumer.

Walmart, the world’s largest retailer, is often treated as a barometer of Main Street. Its executives said customers remain “resilient despite declining sentiment”, but are “increasingly selective about purchases”. In other words, shoppers are still out there but trading down – choosing cheaper brands or waiting for sales. This fits a broader pattern: companies across retail, food, travel, and finance are noting that consumers are cautious, yet not in full retreat.

By examining these earnings reports, we get a clearer picture of spending today. For example, Target turned a quarter of flat sales into a profit surprise by cutting prices and drawing back cautious customers. Discount chains like Dollar General actually raised forecasts as budget-savvy shoppers flocked there. At the same time, home improvement retailers such as Home Depot and Lowe’s saw slowing sales – people aren’t rushing to buy new furniture or renovation supplies. Fast-food giants McDonald’s and Starbucks both reported weaker store traffic, reflecting diners being picky or trading down to value menus.

Meanwhile, financial firms say that overall household balance sheets are still holding up. Bank CFOs note strong credit card and debit card spending on average. But that spending is “skewed by higher-income consumers.” Lower-income families are starting to feel the pinch with rising debts and delayed big-ticket buys.

In short, the recent earnings season paints a mixed but telling picture. The US consumer isn’t collapsing – he or she is adjusting. Shoppers remain active but cautious, favouring essentials and value. This blog will dive deep into the data and examples behind this story, covering retailers, restaurants, travel, autos, banking, and more. By understanding what the numbers say, we can see how Americans are living and spending today, and why companies are watching these trends so closely. Let’s look at the details.

Retail Sector: Shopping for Cues

Consumer-facing retailers often offer the clearest window into household spending. In the latest quarters, mass-market chains like Walmart and Target have reported solid sales, but with important caveats. Analysts now view these companies as proxies for the state of the US consumer. If Walmart customers pull back, it can be a sign of broad caution.

Big-Box Stores: Walmart and Target

Walmart has stood out in recent results. Its sales have kept growing, thanks partly to a focus on groceries and low prices. Indeed, Walmart has beaten earnings estimates 11 quarters in a  Its stock has jumped sharply as investors see it as a “sweet spot” for a cautious economy. Yet Walmart’s own commentary is telling: management expects to strike a cautious tone. With the labor market cooling and inflation ticking up, executives aren’t sounding alarm bells, but they are noting that shoppers remain price-sensitive. One analyst said Walmart is essentially “middle America”, and people will look to its results to judge overall consumer health.

Figure: Shoppers in a Walmart store (Reuters). Walmart’s recent earnings act as a barometer for broader retail demand.

Target showed a similar pattern. In mid-2024, the retailer reported its first rise in same-store sales in over a year. This was driven by major price cuts to attract deal-seeking shoppers. Target’s CEO noted that discounted prices and new, low-cost product lines drew people into stores. In fact, foot traffic rose 3% in that quarter – a big reversal from previous declines. As a result, Target raised its profit guidance for the year.

The key takeaway from Target’s call was blunt: “The consumer is feeling nervous and pinched, but consumers still have plenty of purchasing power. They’re just being picky about where they spend.” In other words, Americans aren’t running out of money, but with higher groceries and rent, they’re trimming other spending. Grocery and daily essentials took priority, while big-ticket categories like electronics, apparel, and home goods were cut. This explains why Target’s same-store sales fell for a year – its key categories were weak – and only recovered when it slashed prices aggressively.

Key points for big-box retail:

• Steady traffic, cautious spending. Walmart and Target reported more visitors, but customers hunted for bargains.

• Price cuts boost sales. Target’s summer price cuts on thousands of items led to a sales uptickreuters.com. Walmart continues to lean on its low-price model to hold market share.

• Consumer remains selective. Shoppers are “very discriminating” and favor value brands. Even with enough income, many opt for cheaper alternatives (e.g., private labels or discount deals) over premium buys.

• Outlook cautious. Management at these retailers expects consumers to remain under pressure. They’re monitoring tariff impacts and high food inflation, which could weigh on spending.

Discount and Grocery Chains

Beyond superstores, discount outlets, and grocery-focused chains offer key clues. These retailers cater to budget-conscious shoppers. In recent results, they’ve generally done well.

Dollar General is a prime example. In August 2025, it reported blowout results – raising its full-year earnings forecast thanks to a surge in same-store sales. The company’s executives explicitly tied this to “pressured Americans” seeking cheaper groceries, apparel, and seasonal goods. Shoppers from all income levels have been visiting dollar and discount stores for bargains as import tariffs and sticky inflation sap their budgets. Dollar General said core lower-income customers even increased spending in Q2 despite souring sentiment. Its same-store sales rose 2.8%, beating expectations, driven by more visits and a bit more spent per trip.

Similarly, Costco and other warehouse clubs have seen healthy traffic as members look to stock up in bulk at lower unit prices (though Costco's results vary by quarter). We don’t have a direct quote here, but industry data shows wholesale clubs benefitting from customer thriftiness.

At the other end, grocery chains like Kroger have reported flat to modest growth, with the mix shifting toward basic food items over specialty or prepared foods. The pattern is that meals out and gourmet groceries may be trimmed, while essentials like fresh produce and staples see steady demand.

Key points for value-focused retail:

• Value seekers on the move. Chains like Dollar General are capturing business from a broad income range as customers hunt bargains.

• Essentials over extras. Shoppers at grocery and discount stores are spending on necessities first. Non-essential items (branded goods, non-food items) are being replaced by private-label or cheaper options.

• Tariffs and inflation weigh. Import tariffs have already pushed up some prices. Retailers note they must balance keeping staples affordable while passing on any cost increases.

• Forecasts tick higher. Some discount chains are raising guidance, reflecting strong demand at these stores. But they also warn of challenges ahead if economic pressure grows in 

Home Improvement and Big Purchases

Home renovation and large durable goods are sensitive indicators of consumer confidence. These are items shoppers often can delay if they worry about money. The latest results from Home Depot and Lowe’s give a mixed outlook.

Figure: Home improvement stores like Home Depot saw weaker demand as customers focused on essentials.

Home Depot and Lowe’s reported second-quarter (summer) earnings amid a very sluggish housing market. The U.S. housing recovery is stalled, and interest rates are high, so fewer people are moving or taking out home improvement loans. Industry data showed that sales at building materials and garden supply retailers fell about 4% year-over-year each month from May to July. In contrast, back-to-school retail gave a late summer boost to other categories.

Even so, Home Depot and Lowe’s are weathering the slowdown better than smaller rivals. They have strong brands, a large market share, and have expanded into professional contractor sales (which are steadier). Credit card purchase data show Home Depot’s sales were flat in May and July, with a small dip in June; Lowe’s saw slight growth in May/July and a smaller dip in June. Analysts therefore expected Home Depot’s revenue to rise ~5.1% in Q2 (vs 0.6% last year), and Lowe’s up ~1.6%

Home Depot’s chief executive noted that spring/summer had been hyped as a “Super Bowl season” for home retail, yet consumer response proved muted. Consumers were focusing on essential purchases – groceries, apparel, fuel – and holding back on big projects. “I’m not sure there is enough impetus, or need, to drive spending in the building material & garden supply space right now,” said an industry economist, Reuters.com. With high mortgage rates, potential buyers and homeowners are renting longer and delaying major renovations.

Key points for big-ticket home retail:

• Sales down or flat. Both Home Depot and Lowe’s saw sluggish comparable sales in the summer. Consumers shopped less for tools and materials.

• Focus on essentials. Analysts note, “the consumer is more focused on essentials, and pricing is a key driver.” That means groceries and small purchases are prioritized.

• Contractors help cushion. Sales to professional customers (contractors and builders) remained healthy, as those clients buy in bulk and are less price sensitive. Both chains are expanding in this area to offset weak DIY demand.

• Forecasts steady. Despite quarterly misses, Home Depot kept its annual outlook intact. Both retailers expect any housing recovery (or rate cuts) might start later in the year. Tariffs still lurk as a wild card: some prices may rise if import levies persist.

Food and Dining Out

Eating and drinking trends also shed light on household sentiment. If consumers tighten their belts, restaurants are among the first to feel it. Recent earnings from fast food and coffee chains show diners are being picky about value.

McDonald’s posted a rare profit miss in early 2024, breaking two years of beating estimates. The company reported that global comparable sales grew only 1.9%, well below expectations. In the U.S., same-store sales rose just 2.5%, far below the 12% surge a year earlier. CEO Chris Kempczinski bluntly said customers have become “very discriminating in how they spend their dollar.”  Notably, he said “all income cohorts are seeking value” – from lower- to higher-income patrons.

In plain terms, even McDonald’s customers were downscaling. Many opted for cheaper items or fewer visits. McDonald’s had raised prices (mid- to high-single-digit) to cover cost increases (eggs, meat), but that eroded its usual affordability, edge. The chain acknowledged its menu had lost some relative advantage, especially in markets hit by inflation. This contrasted with its rivals: Burger King-owner Restaurant Brands and Domino’s Pizza beat expectations that quarter by leaning into value promotions. In summary, McDonald’s earnings highlighted that rising prices were starting to dampen casual dining, especially among budget-conscious diners.

Starbucks similarly sounded caution. In January 2024, Starbucks cut its full-year sales forecast. The CEO said conflicts in the Middle East and economic volatility had hurt sales in some regions, including the U.S. The company missed quarterly sales estimates, noting slower traffic for coffee and cold drinks at home stores. Starbucks pointed to temporary boycotts over political issues, but also acknowledged consumers were being “more cautious in spending” on premium beverages. They expect U.S. comparable sales growth of 4–6%, down from the prior 5–7% range, reflecting caution among shoppers on everyday luxuries.

Fast-food chains are adapting. Many have value menus or bundles to lure back cutback consumers. For example, McDonald’s and others introduced promotions that slightly lifted pizza and burger chains’ sales. Still, the pattern is clear: Americans are not throwing away their remaining discretionary dollars. Dining out is durable, but not booming.

Key points for foodservice:

• Value over indulgence. Chains like McDonald’s report that customers gravitate towards cheap menu items. All income groups say they need deals.

• Menu inflation hurts traffic. Price hikes to cover costs have made fast food less of a bargain. Lower-income budgets are especially stretched.

• Mixed performance. Casual dining and sit-down restaurants (not covered here) have struggled as well; bakery or pizza shops offering deals saw upticks, showing customers want bargains.

• Outlook cautious. Starbucks and McDonald’s executives warn of continuing headwinds. They’re investing in digital marketing and loyalty offers to keep customers coming back. But they expect modest growth, not a boom.

Travel and Leisure

Spending on travel, hotels, and entertainment is a classic bellwether of consumer confidence. If people cut back, vacations and trips are often delayed. 2025’s recent results have pointed to soft demand in some travel sectors.

Figure: A Dollar General store catering to budget shoppersreuters.com. (Image: Person exiting a Dollar General store in Mount Rainier, Maryland.)

Airlines: Domestic airlines have seen a split between high-end and economy flyers. Southwest Airlines (a low-cost carrier) reported a disappointing 2025 Q2: profit and revenue missed estimates due to “tepid demand from U.S. consumers for travel.” The company noted uncertainty from trade tensions and living costs, forcing carriers to offer discounts. Leisure travel demand had slowed earlier in spring 2025, stabilizing only a bit by summer. Importantly, Southwest expects Q3 fares to be flat or even down vs last year. It also cut its full-year profit target sharply due to weak pricing power.r

By contrast, airlines focusing on premium travel (like Delta and United) have fared better. They report strong sales in first/business class as affluent travelers keep paying for upgrades. This highlights a divide: price-sensitive travelers are cutting back, while wealthier customers travel on business or vacation despite higher costs. Southwest CEO summarized that summer 2025 has been “depressed demand” for economy seats, forcing fare increases.

Hotels: Hotel chains have similarly noted slower bookings for standard rooms. Marriott International cut its 2025 revenue forecast after Q2 results. The CEO said Americans have cut back on discretionary travel and expenses, partly due to tariff uncertaintiesr. Indeed, Marriott’s U.S. room revenue was flat year-on-year in Q2: upscale hotels (Ritz-Carlton, Sheraton) grew about 4%, but mid-range brands fell about 1.5%. Smaller corporate stays were also weak. In effect, higher-end hotels held up better – again suggesting wealthier consumers kept traveling – while budget hotels and short trips saw slight declines.

Key points for travel/leisure:

• Economy travel soft. Low-cost carriers and budget hotels reported weaker demand. Discount fares have been needed to keep seats filled.

• Premium demand holds up. Airlines’ first-class bookings and luxury hotel stays remain strong, showing richer consumers continue to spend on travel.

• Spending gap by income. This echoes a broader pattern: higher-income Americans are “fueling” overall travel spending, while lower-income travelers stay at federalreserve.gov

• Uncertain outlook. No firm rebound in early 2025. Airlines hedging with flexible forecasts. Hotels are keeping plans conservative until they see stronger booking patterns. Tariffs and trade wars loom as wild cards that could further dampen tourism.

Autos and Big-Ticket Durables

Vehicle sales are another big consumer barometer. Cars and trucks are expensive and often financed, so shifts here show confidence or strain.

Automakers: Here we see an interesting contrast. In October 2024, General Motors (GM) reported a strong quarter, beating earnings and raising its full-year profit outlook. GM’s CFO praised a “remarkably resilient” U.S. consumer who continued buying trucks, and in fact, GM’s profits hit a two-year high on robust prices and healthy sales. The company said that with jobs still steady, consumers kept purchases going despite high interest rates. GM even raised its 2024 profit target, much to investors’ relief.

By contrast, Ford and Stellantis (owner of Dodge, Jeep) reported more trouble. Ford had to navigate quality issues, and Stellantis saw sales drop in North America after raising prices and pulling incentives. This highlights that while some customers kept buying GM’s full-size pickups (where Ford also competes), others were deterred by higher costs.

Key points for autos:

• Mixed results. GM’s strong earnings (on trucks/SUVs) suggest Americans are still buying durable goods if costs can be managed.

• High interest bites. Higher loan rates mean some buyers are delaying or opting for cheaper models, affecting companies more reliant on smaller cars or tight margins.

• Income factor. Those with higher incomes financed new vehicles, but lower-income buyers tightened budgets. Overall, U.S. job stability helped keep some auto sales afloat.

• Watch for slowdown. If financing costs remain high, automakers forecast slower growth. Some have warned margins may compress next year if demand cools.

Financial View: Credit and Confidence

Banks and credit card firms offer another perspective. If Americans were really strained, we would see soaring delinquencies and falling card spending. So far, that “red flag” has not fully appeared in earnings.

Big banks like JPMorgan Chase and Wells Fargo reported in late 2024 that consumer spending remained “resilient” in the third quarter. Both banks saw year-over-year increases in debit and credit card volumes (e.g., JPM was +6% volume). Their executives said spending normalized to pre-pandemic patterns – not splurging on travel as before, but also not collapsing.

In September 2025, bank CFOs again said household finances look healthy. Citi’s CFO noted consumer spending was up and credit card delinquencies were still low. Wells Fargo’s CFO echoed that activity and credit performance are “quite strong,”. Bank of America also reported fewer charge-offs, meaning fewer missed payments than expected. The message from these lenders is that the average American, especially with good jobs, is managing debts and continuing to spend.

However, all these bankers warn of an important caveat: the picture is uneven. Higher-income customers are propping up the numbers. Analysts say spending data is “skewed by the higher-income, higher-net-worth consumer. Wealthy households have enjoyed stock and home wealth gains, letting them carry on. But evidence of stress is creeping in at the lower end: smaller deposits, higher credit card balances, and rising delinquencies are surfacing for less affluent groups.

Key points for finance:

• Spending holds up on average. Major banks report still-solid card usage overall. The consumer hasn’t pulled back dramatically.

• Credit remains in check. Banks see no major surge in late payments or bankruptcies yet. Charge-offs (loan losses) are not spiking.

• Income divide. Economists note spending increases are mainly from higher-income Americans (federalreserve.gov). Lower-income families show pockets of weakness.

• Saving cushions. Some of the resilience comes from savings built up earlier in the pandemic and continued government support through tax cuts or benefits.

Income Divide and Overall Trends

Putting it all together, recent earnings and studies consistently point to an income divide in consumer health. This is echoed by Federal Reserve research and surveys.

A Fed analysis of retail spending found that high- and middle-income households have largely driven the recent retail boom, while low-income households’ spending has barely budged above post-pandemic federalreserve.gov. In plain language, wealthier Americans kept buying goods even as prices rose, while the poorer half of the population steadily struggled with essentials.

Survey data support this. Deloitte’s latest “State of the US Consumer” report (Sept 2025) finds financial insecurity creeping up – more Americans feel squeezed now deloitte.com. Yet interestingly, discretionary spending intentions are still recovering. This suggests that even as people feel pinched, many are making room in their budgets for some non-essentials. It’s a balancing act: smart spending rather than cut-throat retrenchment.

In summary, the state of the US consumer is uneven and cautious. Earnings from Walmart to GM show that Americans are still shopping and buying – but with a much sharper eye on price and necessity. Higher earners continue to spend, buoying overall figures, while lower earners are tightening their belts. Companies that cater to value and essentials are doing well, while those reliant on discretionary or big-ticket purchases are watching nervously.

Why It Matters: Understanding these trends is crucial for businesses and policymakers. If customers pull back on credit cards or store loyalty falters, retail stocks and economic growth could falter. Conversely, if wealthy consumers keep spending, we may avoid a steep recession. For now, the mixed messages in earnings calls signal that the US consumer isn’t collapsing, but is far from carefree.

Conclusion and Next Steps

In short, recent earnings paint a complex portrait of the modern American consumer. On average, spending remains solid – and banks say credit performance is still good. But drilled down, two truths emerge: Consumers are careful, and spending is polarized. Retailers and analysts describe a shopper who still needs to make essential purchases, looks for deals, and delays big discretionary buys. At the same time, affluent households continue to splurge enough to keep sales up.

For businesses and investors, the takeaway is clear: watch earnings for consumer clues. Pay attention to what companies say about traffic patterns, pricing, inventory, and promotions. If companies sound upbeat about higher-income shoppers, that suggests the wealthy are doing fine. If they emphasize discounting and stockpiling essentials, that signals caution.

For everyday readers: consider how this might affect your own spending. Even as some segments of the economy thrive, financial pressures exist for many families. Experts recommend making smart budgets, taking advantage of deals, and building savings if possible. The “state of the US consumer” may not be booming, but it is adapting.

Where to Learn More: For more in-depth analysis on consumer trends, check out our posts on how inflation affects daily budgets and the Fed’s consumer sentiment surveys (internal links). External sources like Deloitte’s Consumer Signals and Fed research also provide valuable data.

Call to Action: What will consumers do next? Stay tuned to upcoming earnings reports and official spending data. Share this post if it helped you understand today’s consumer trends. And leave a comment: how are you adjusting your budget or shopping habits in this economy?