American consumers are in a foul mood.
The Conference Board’s Consumer Confidence Index fell to 86 in April, down 7.9 points from its previous reading and the lowest level since the Covid-19 pandemic struck five years ago. Worse, the Conference Board’s expectations index, which measures respondents outlook for the next six months, fell to 54.4, its lowest level since 2011 and a reading that’s consistent with an economic recession.
With consumer spending accounting for nearly 70% of the U.S. economy, any slowdown and signs of negative sentiment is considered very bad news. The darkening outlook is particularly bad for companies that rely on consumer spending such as Walmart (WMT), Costco Wholesale (COST), and McDonald’s (MCD). Although few U.S. stocks are likely to be spared if America does enter a recession.
Dim View
Perhaps most troubling, the Conference Board found that consumer attitudes grew darker the further out they looked into the future. The number of people surveyed who expect employment to fall over the next six months hit 32% in April, nearly as high as in spring 2009 during the Great Recession.
“The three expectation components—business conditions, employment prospects, and future income—all deteriorated sharply, reflecting pervasive pessimism about the future,” said the Conference Board in a news release. Consumer expectations for their future income turned negative for the first time in five years during April.
The dim views extended to the stock market, with nearly half (48.5%) of consumers expecting lower share prices over the next 12 months, also the worst reading since 2011. Fueling the pessimism are fears over import tariffs and growing expectations for an economic decline.
Is WMT Stock a Buy?
The stock of Walmart has a consensus Strong Buy rating among 31 Wall Street analysts. That rating is based on 29 Buy and two Hold recommendations assigned in the last three months. The average WMT price target of $108.59 implies 13.39% upside from current levels.
