In recent weeks, many large US retailers have published their latest financial results. These include major names like Walmart, Target, Home Depot, Lowe’s, and BJ’s Wholesale, along with clothing and home brands like TJX (owns TJ Maxx), Ross Stores, Urban Outfitters, Ralph Lauren, and Williams Sonoma.
These reports give us clues about how shoppers are feeling and behaving, and they show that in America, people are still spending.
Even though news reports and surveys say people are worried about the economy, actual data shows that spending remains strong. Most retailers saw sales growth. The only big exceptions were Lowe’s, which is struggling due to a weak housing market (people aren’t spending as much on home improvement), and Target, which has had challenges for years with its strategy and pricing.
Walmart summed it up nicely: shoppers are consistent, care about low prices, and want fast delivery. They’re not panicking or pulling back in a big way.
Even with some economic uncertainty, most companies did not lower their predictions for future profits or sales either. The one exception was Ross Stores, which buys over half its products from China. Because of new tariff changes, Ross said it couldn’t make accurate forecasts right now.
So far, not much effect from tariff uncertainty on the US consumer. But it’s not just the effect on consumer demand that had many worried about tariffs, it was also the effect on price levels.
A tariff is a tax on imported goods. If a US retailer imports products from China, for example, a tariff makes those products more expensive. Retailers then have a choice. They can raise prices to cover the extra cost, or do they can absorb the cost and make less profit.
In Walmart’s report on May 15th, they were very direct: “We can’t absorb all the costs from tariffs. Retail margins are too small.” In other words, they’ll have to raise prices on some products. But they also want to stay competitive and keep customers happy, so they’re being cautious.
One analyst asked Walmart’s CEO why they didn’t just slash prices to gain more market share. His answer: ‘we could, but we also want to grow our profits. We need to balance what’s good for customers and what’s good for investors.’
Other retailers were more vague about their pricing strategies in the most recent quarter. Home Depot said they plan to ‘generally maintain pricing’ and don’t see big price increases for now.
Others talked about ‘portfolio pricing’. meaning they might raise prices on some products and lower them on others to balance things out.
This all means that undoubtedly some prices are going up because of tariffs. Companies are watching closely to see how customers react. If people stop buying, they’ll change course.
These better than expected results from US retailers supports the market recovery seen in US stocks. Tariffs have come and appear to be going away as a concern for markets, with little evidence so far of much impact on the economy.
