Even in the best of times, the consumer is hard to pin down.
The process that leads shoppers to put their money here instead of there — or to just keep their wallets shut altogether — involves a complicated mix of economics, product development, marketing, happenstance and psychology.
Since the exact cause and effect is impossible to isolate, investors and economists often rely on what is, in effect, the consumer vibe.
And the vibes are kind of meh headed into fall.
In its last reading, The Conference Board’s Consumer Confidence Index ticked up to 100.3 last month from 97.8 in June.
Slicing and dicing the reading at the time, Dana Peterson, chief economist at The Conference Board, said: “Even though consumers remain relatively positive about the labor market, they still appear to be concerned about elevated prices and interest rates, and uncertainty about the future; things that may not improve until next year.”
The Consumer Confidence figure is based on two other indices, the Present Situation Index based on the here and now and the Expectations Index, which looks six months out.
Generally, shoppers feel much better about their current situation than they do about the future.
The Expectations Index rose to 78.2 in July — and while that’s up from 72.8 in June, it’s still below the reading of 80 that has usually signaled a recession ahead.
Since then, the U.S. unemployment rate ticked up to 4.3 percent, its highest level since 2021, and the stock market took a rollercoaster ride.
Anxiety is only expected to increase as election day approaches and Vice President Kamala Harris and former President Donald Trump vie for the presidency.
Brands, while aware of the broader consumer context, are often left to focus on things they control.
Justin Picicci, Ralph Lauren Corp.’s chief financial officer, told analysts on a conference call this month that the company expects the consumer status quo to remain.
“That includes caution around the global macro and consumer backdrop, wholesale channel softness in North America and also some incremental pressures from product costs largely in the second half of our fiscal year,” Picicci said.
Ralph Lauren looks to counter all of that with brand power.
“We’ve been building a durable strategy for a number of years,” the CFO said. “And Ralph really built the ultimate timeless brand….We’re going to continue to lean on our brand, our really strong brand that brings with it that clear value proposition that consumers know and trust.”
While brand is a constant for Ralph Lauren, a more-confident base of consumers never hurts.
The Conference Board will next update their index on shopping sentiment for August on Tuesday.
