Retailers are sounding the consumer alarm

Dollar General yesterday reported Q4 earnings that narrowly beat Wall Street estimates. But the chain issued weak forward guidance and warned that consumers “only have enough money for basic essentials,” joining a slew of other retailers who in recent weeks have also run over the telegraph to tap out “S-O-S.”

• In an interview at the Economic Club of Chicago in late February, Walmart CEO Doug McMillon said “budget-pressured” customers are showing stressed behaviors.
• Kohl’s CEO Ashley Buchanan on Tuesday said consumers making less than $50,000/year are “pretty constrained,” adding that “it’s also pretty challenging” for those making less than $100,000.
• Target, Foot Locker, and Lowe’s all reported seeing weak demand in February.
• Costco, whose membership-fee-paying customer base skews higher-income, said last week that demand has shifted toward lower-cost proteins such as ground beef and poultry.

Big picture: Consumer spending, which accounts for over two-thirds of US economic activity, has been resilient over the past few years. But cracks are starting to show. Consumer spending fell in January for the first time in nearly two years. And consumer confidence has dropped for the last three months, with surveys indicating concerns around tariffs, inflation, and potential personal unemployment.

Looking ahead…We’ll get more of a window into how consumers are feeling this morning, when the initial reading of the University of Michigan’s consumer sentiment index for March is unveiled.