Corporate Earnings Show Consumer Companies Have Pricing Power
Higher interest rates haven’t stopped shoppers from spending, in a worrying sign for inflation.
American consumers are still eager to spend, giving companies that cater to them room to push through more price increases. That’s a key takeaway midway through earnings season.
Companies in the consumer staples segment, which includes such household names as Coca-Cola, Procter & Gamble and Hershey, stood out, with 90.5% reporting first-quarter results through May 2 that beat analyst expectations, versus 80% for the entire S&P 500. The consumer discretionary category, which includes automakers, restaurants and hotels, also outperformed, with sales up 9.2% for the quarter, compared with 3.5% for the entire universe of companies. This has implications for the Federal Reserve as it continues its most aggressive cycle of interest-rate hikes in 40 years to corral inflation.