Summary: Economic activity is robust across the economy. AI spending is leading the way, and even though Google’s FCF turned negative, it doesn’t look like Capex is going to slow down.
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The economy remains resilient
“The US consumer and the overall economy remained resilient despite the high energy prices and everything. When you pick up the news every day, one would think the world’s falling apart. Actually, the portfolio that the consumer continues to perform remarkably well. The unemployment rate in June was lower than in February before the tariff conflict began. Jobless claims remain low. Job creation has rebounded over the past few months” - Capital One Financial (COF 0.00%↑) CEO Richard Fairbank
“While the current operating environment has been impacted by geopolitical factors, the broader economy has remained resilient” - First Citizens BancShares (FCNCA 0.00%↑) CFO Craig Nix
“...in the Americas, consumers have remained steady, economic activity is constructive, and spending has held up even as the U.S. housing market is still soft under the weight of affordability concerns and high mortgage rates.” - Dow (DOW 0.00%↑) CFO Jeffrey Tate
Consumer spending remains strong
“US consumer spending was up 11%, the highest level of growth since Q1 2018, excluding periods impacted by the pandemic. We continue to see good engagement from our younger customers. Millennials and Gen Z, which make up the largest share of US consumer spending, remained our fastest-growing cohorts this quarter.” - American Express (AXP 0.00%↑) CFO Christophe Le Caillec
“Consumer spending, that remains strong. As a result of inflation, real wage growth turned negative in April and May on a year-over-year basis, but it was back in positive territory ever so slightly in June as inflation ticked back down. When we look at bank balances and debt servicing burdens of our customers, these look a bit stronger than a year ago across income levels..We continue to see healthy spend growth driven both by account growth and by steady growth in spend per customer.” - Capital One Financial (COF 0.00%↑) CEO Richard Fairbank
“...the consumer is incredibly resilient.” - Southwest Airlines (LUV 0.00%↑) CEO Bob Jordan
Labor markets are supportive
“Despite these inflationary pressures, low unemployment continues to support overall consumer health. Continued high employment levels have acted to limit more broad-based credit impacts, which give lenders the confidence to continue originating loans.” - Equifax (EFX 0.00%↑) CEO Mark Begor
“Hiring demand continues to improve, market conditions are increasingly more supportive of our business.” - Robert Half (RHI 0.00%↑) CEO Keith Waddell
Inflation is stubborn
“So essentially, we’re able to cover inflation with price, but inflation is stubborn. We see a lot of inflation in electronics, memory, obviously, copper, and we also see inflation in labor. So I think this is the environment we’re in. We’ll continue to price at that level and continue to manage things with our customers.” - Honeywell International (HON 0.00%↑) CFO Mike Stepniak
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