Post-pandemic consumer splurging is rapidly coming to a halt, according to two widely followed U.S. companies \u2014 more evidence that the U.S. economy is likely in for a period of slower economic growth.<\/p>\n
Pepsi and Delta Air Lines both offered subdued financial outlooks as they reported quarterly earnings Thursday, and both cited the same reason: Customers are now becoming more value conscious, after years of struggling with elevated costs.<\/p>\n
‘The impacts of persistent inflationary pressures and higher borrowing costs over the last few years have resulted in tighter household financial conditions,’ Pepsi said Thursday in a statement. <\/em><\/p>\n As a result, the company said, consumers have become more price sensitive across its entire range of products.<\/p>\n Delta CEO Ed Bastian echoed the sentiment in explaining his company’s lower outlook for the rest of the year. <\/p>\n \u201cWhat you see happening is the impact in the domestic marketplace to the lower fare discounting that\u2019s been going on this quarter,\u201d he told CNBC airline reporter Leslie Josephs.<\/p>\n In other words, Delta customers have started to push back on paying top-dollar to travel in the skies. <\/p>\n The stock price of both companies fell in early Thursday trading. A third consumer-focused company, Slim Jim-parent Conagra Brands, also reported lower earnings Thursday, and CEO Sean Connolly likewise said customers are becoming more cost conscious as they ‘adapt and establish new reference prices.\u201d<\/p>\n The seemingly economy-wide bargain-hunting was further reflected Thursday in the latest official inflation data, which showed the monthly Consumer Price Index had meaningfully declined for the first time since the pandemic. <\/p>\n While the change in the 12-month index remained above the Federal Reserve’s 2% goal, at 3%, it cooled more than analysts’ expectations. <\/p>\n Thursday’s company announcements kick off several weeks of other big consumer companies giving business updates. <\/p>\n Even as consumers start budgeting more, economic forecasters say there is still no sign of a recession. While the labor market has begun to weaken, wage growth remains healthy \u2014 even surpassing the rate of inflation, but the pay increases are not excessive. <\/p>\n ‘The labor market is normalizing, it isn\u2019t seeing the type of weakness that could spark recessionary worries,’ Josh Jamner, Investment Strategy Analyst at ClearBridge Investments financial group, wrote in a note to clients. He added that unemployment claims data show that ‘a layoff cycle that could lead to a recession is not currently building.\u201d<\/p>\n Economists say the goal is ‘disinflation,’ a situation where the economy downshifts without slipping into recession. It would mean slower price growth without a full-blown recession.<\/p>\n Gregory Daco, chief economist at EY (formerly Ernst & Young), sees that scenario currently playing out. <\/p>\n ‘Softer consumer spending growth due to increased pricing sensitivity, reduced markups, moderating wage growth, and declining rent inflation will continue to provide a healthy disinflationary impulse,\u201d Daco wrote in a note to clients Thursday. <\/p>\n<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Post-pandemic consumer splurging is rapidly coming to a halt, according to two widely followed U.S. companies \u2014 more evidence that the U.S. economy is likely in for a period of slower economic growth. Pepsi and Delta Air Lines both offered subdued financial outlooks as they reported quarterly earnings Thursday, and both cited the same reason: <\/p>\n","protected":false},"author":1,"featured_media":4958,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-4957","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"_links":{"self":[{"href":"https:\/\/digitaltradecenter.com\/index.php\/wp-json\/wp\/v2\/posts\/4957","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/digitaltradecenter.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/digitaltradecenter.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/digitaltradecenter.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/digitaltradecenter.com\/index.php\/wp-json\/wp\/v2\/comments?post=4957"}],"version-history":[{"count":0,"href":"https:\/\/digitaltradecenter.com\/index.php\/wp-json\/wp\/v2\/posts\/4957\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/digitaltradecenter.com\/index.php\/wp-json\/wp\/v2\/media\/4958"}],"wp:attachment":[{"href":"https:\/\/digitaltradecenter.com\/index.php\/wp-json\/wp\/v2\/media?parent=4957"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/digitaltradecenter.com\/index.php\/wp-json\/wp\/v2\/categories?post=4957"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/digitaltradecenter.com\/index.php\/wp-json\/wp\/v2\/tags?post=4957"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}