With the third-quarter earnings season underway, 64% of S&P 500 (SPX) companies had reported their results as of October 31, with 83% of them reporting a positive EPS surprise and 79% reporting a positive revenue surprise. At the same time, RBC Capital Markets notes that earnings commentary from consumer-focused companies points to a weakening consumer.
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“The Consumer-related companies that reported last week continued to describe a price-sensitive and value-conscious consumer,” said analysts led by U.S. head of equity strategy research Lori Calvasina.
Consumer Sentiment Slips on Tariffs and Weak Spending
RBC notes that several factors have contributed to this trend, such as tariffs, lower restaurant demand, and shorter vacation times. A rush to front-run tariffs and purchase goods during the beginning of the year may have also contributed to weaker demand as 2026 approaches.
The University of Michigan’s Survey of Consumer Sentiment reflected this trend with an October reading of 53.6, the lowest figure since May. Consumers also expect inflation of 4.6% over the next year, well above the Fed’s target of 2%.
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