The “K-shaped” economy has become a hardened idea among corporates, investors, and consumers.
And those at the bottom end of the K, or Americans on the lower end of the income scale, continue to be under pressure.
Comments from some of America’s biggest retailers this week — ranging from Walmart (WMT), to Home Depot (HD), to Target (TGT), and Lowe’s (LOW) — all offered some version of this caution, either about low-income shoppers specifically, or the ways they see pressured consumers showing up in their business.
And while commentary from executives on conference calls can sometimes be a self-fulfilling prophecy as analysts ask each company versions of the same question, the uniformity in response is the latest signal that the US economy is ending 2025 in a weakened state.
“We continue to benefit from higher-income families choosing to shop with us more often,” Walmart CEO Doug McMillon said on the company’s earnings call Thursday morning.
“Middle-income households have been steady, and while lower-income families have been under additional pressure of late, we’re encouraged by how our teams are meeting them with greater value across necessities and doing what we can to help them stretch their dollars further.”
On Wednesday, Target executives said, “Many of the themes remain largely consistent with what we’ve shared in prior quarters. Guests are choiceful, stretching budgets and prioritizing value.”
At TJX Companies — which houses brands like TJ Maxx, HomeGoods, and Marshalls — CEO Ernie Herrman told analysts, “my barometer for our other retailers struggling a little is just the fact that the availability of merchandise across the board is so high across good, better, and best.”
At Home Depot, CEO Ted Decker told analysts Tuesday morning that, “We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand.” The company cut its full-year forecast in response.
Lowe’s echoed what Home Depot said elsewhere on its call — that the outlook for homeowners remains strong, with American homeowners sitting on lots of equity with demand for new projects — but near-term caution is keeping these prospective investments on hold.
“Overall, the US homeowner remains healthy,” Lowe’s CEO Marvin Ellison said. “Balance sheets are strong, and consumers continue to spend. However, affordability and uncertainty in the broader economy continue to weigh on consumer confidence, particularly when it comes to larger discretionary purchases, as borrowing costs have been elevated for longer than originally anticipated.”