Walmart Earnings Kick Off Retail Season: U.S. Consumption Slowing but Not Stalling
Nashnova编辑部
Walmart and Target report this week as Goldman Sachs warns real consumer spending growth will cool to 1%–1.5% in H2; July retail sales fell 0.6% month-on-month, yet corporate earnings haven't collapsed — the market is testing whether this is a slowdown, not a stall.
Why did spring spending look so strong?
Q2 personal consumption grew 3.2%; median S&P 500 discretionary-sector sales rose 5.9% year-on-year.
This means → the headline numbers looked impressive, but Goldman's team — led by chief economist Jan Hatzius — argues that unusually large tax refunds front-loaded a wave of purchasing power.
In plain terms = part of spring's spending heat was "borrowed" from the future, not a trend acceleration.
Why did July data cool so suddenly?
July retail sales fell 0.6% month-on-month, the steepest drop in nearly 14 months. The control group — a subset that strips out volatile categories like autos and gas stations and tracks GDP more closely — declined 0.4%.
Goldman cites two technical factors: Amazon moved Prime Day from July into June, pulling some spending forward, and the boost from excess tax refunds faded.
This means → July likely overstates the cooling, but the direction is clear: spending is decelerating.
Is spending diverging across income groups?
Procter & Gamble CFO Andre Schulten said in late July that U.S. consumer spending is "okay and broadly stable."
But he flagged a split: higher-income shoppers still spend freely on innovative products, while lower-income consumers remain cautious on everyday essentials.
This reflects a pattern typical of late-cycle economies — the headline holds up, but the pressure concentrates at the bottom.
Why is the market fixated on Walmart's and Target's outlook?
Deutsche Bank analyst Krisztina Katai wrote that with cautious consumers and potentially more frequent promotions, it will be harder for Walmart to keep beating sales expectations.
This means → the market's real focus is not the already-reported Q2 numbers but the Q3 guidance — a direct read on how retailers themselves see second-half demand.
How have rate expectations shifted?
July CPI rose just 0.1% month-on-month; core CPI fell to 2.5% year-on-year. PPI was flat, well below the 0.2% consensus. July nonfarm payrolls unexpectedly dropped by 23,000.
As of August 17, CME pricing put the probability of a September rate hike at roughly 33%, down from 51.2% a month earlier. A Reuters poll found that most economists expect the 3.50%–3.75% policy rate to hold for the rest of 2026.
Hatzius's view: unless August data stage a dramatic reversal, a September hike is now extremely unlikely.
Which scenario matters most for investors?
Best case: spending cools moderately + inflation keeps falling + the Fed stands pat + the earnings cycle stays in expansion. That combination is especially friendly to long-duration tech and AI-infrastructure assets.
In plain terms = if consumers stop fueling inflation, companies keep earning, and the Fed has no reason to raise risk-free rates — that's the most comfortable setup for risk assets.
The risk to watch: spending slides from mild growth into outright contraction while payrolls keep shrinking. At that point, the "rate cuts boost valuations" thesis gets overtaken by earnings recession.
Content is for reference only, not financial advice.