The Home Depot issued a warning about the direction of the U.S. economy as consumers pulled back spending at the home improvement store du...
The Home Depot issued a warning about the direction of the U.S. economy as consumers pulled back spending at the home improvement store during the second quarter of fiscal year 2024.
The company said its sales decreased by 3.6% during the second quarter and it expects sales overall for the year to drop 3-4% compared to last year.
“During the quarter, higher interest rates and greater macro-economic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects,” said Ted Decker, chair, president and CEO. “However, the team continued to navigate this unique environment while executing at a high level.”
CNN noted that consumer spending at Home Depot is considered a bellwether of consumers’ moods about the economy and the housing market in general, as its business is closely tied to the housing market.
The demand for housing far outpaces the supply of available homes in the U.S., thus leading to a housing shortage and exorbitantly priced homes. The situation is made even worse by high interest rates triggered by the inflation crisis that the Biden-Harris administration accelerated with reckless government spending during their first weeks in office.
“Interest rate decisions matter more to Home Depot than they do to an average retailer, if only because a large chunk of home improvement demand is tied to the housing market,” said Neil Saunders, managing director of GlobalData. “High interest rates have, and still are, acting as a brake on house moves.”
Saunders added that Home Depot’s revised outlook for the year “suggests more negative sentiment around the consumer economy from management and reflects a more cautious rate cutting stance from the Fed than was expected earlier in the year.”
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