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Why Companies Are Nervous About the Consumer

·1 min

Better-than-expected quarterly earnings have boosted the S&P 500 close to a record high. However, concerns arise over the struggling consumer as companies such as McDonald’s, KFC, and Starbucks report reduced spending due to high inflation. On the other hand, airlines and hospitality industries note that customers continue to make bookings for flights, hotel rooms, and upscale restaurants. This divergence in consumer behavior sheds light on the perception of President Biden’s economic management as an “economy of the haves and have-nots.” Those with more spending power tend to have less debt and higher gains in their retirement accounts, while the less affluent struggle with depleted savings and increasing credit card debt. The rise of “buy now, pay later” programs could be concealing a growing consumer debt problem. Company executives are now emphasizing the impact of low-income consumers on sales and profit.