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Mill Street Research
@millstreetresearch.com

Consumer spending growth has been stronger than expected, and much better than personal income growth (falling saving rate). But that has not helped projected profit margins for Consumer stocks (Discretionary or Staples) because costs are also rising, especially energy/transportation.

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Mill Street Research
@millstreetresearch.com

Our aggregate data on analyst earnings estimate revisions shows Consumer sectors, along with Materials, Utilities, and Communication Services being well below the US average (based on % of analysts raising vs lowering estimates). Tech, Industrials, Energy, and Financials are the leading sectors.

Mill Street Research
@millstreetresearch.com

So even solid top-line growth is not producing as much bottom line improvement in areas more affected by commodities, interest rates, and tariffs, and that do not benefit much from AI. Macro and policy conditions are better for Tech, Financials, some Industrials, and Energy (depending on the day).