A note from our Chief Economist
Welcome to the inaugural issue of Economic Currents, Board’s new quarterly perspective for leaders in retail, consumer packaged goods, and manufacturing.
We built this newsletter around a simple premise: the headlines about the U.S. consumer and the underlying data often tell two different stories, and the gap between them is exactly where planning mistakes get made. This quarter is a clean example. Consumer sentiment has softened again, this time compounded by the U.S.-Iran conflict and the energy-price and geopolitical uncertainty that comes with it. But our State of the Consumer Index, which weights hard data on jobs, household finances, and spending far more heavily than survey sentiment, remains well above its long-run average. Households, on the whole, are in better shape than they feel.
That does not mean the quarter is uneventful. Two threads run through this report that I’d encourage every planning team to sit with. First, the labor market is still the load-bearing wall under consumer spending, but the cracks — rising layoff exposure, thinning savings buffers — are becoming visible even if they have not yet spread. Second, and more important for how you allocate marketing and inventory dollars, the resilience we’re describing is not evenly distributed. Higher-income households are carrying this outlook. Lower- and middle-income households are not.
My colleagues Boyd, Lucas, Matthew, and Maria walk through the data behind both threads below. I’ll come back at the end with what I think it means for how you plan the second half of the year.
Michelle Green - Chief Economist
View the complete PDF to read the issue in its entirety.
