Financial Associated Press, May 1 (editor Shi Zhengcheng) at the McDonald's and Coca-Cola earnings call held on TuesdayCrashdrive2onlineExecutives of these listed catering giants made it clear to analysts that they are currently in the United StatesCrashdrive2onlineIn the face of persistent inflation, people with lower incomes have reduced their consumption of hamburgers, French fries and soda.
At the same time, high-and middle-income earners continue to maintain a spending resilience that surprised the Fed.
Eat at home on a budget
Ian Borden, McDonald's chief financial officer, lamented to analysts after Tuesday's results that "consumers are very picky about spending money right now."
The company has also said that in the past few months, low-income consumers have begun to reduce their patronage to restaurants and cook at home.
Borden also stressed that while low-income groups are more obvious, what is really important is to note that all income groups are looking for value, and that the company will then offer "price attractive"entry-level packages" for items that consumers are familiar with.
Also on Tuesday, while reporting "strong overall demand in the United States and improving sales prospects," John Murphy, Coca-Cola's chief financial officer, also noted that take-out revenue in North America-sales of restaurants, bars and other venues-was lower than expected due to economic pressures on low-income groups.
Murphy analysis said that there is a certain degree of purchasing power compression among the low-income class, and it is obvious that there has been a shift in consumer behavior in search of value. The company will provide larger and more affordable packaging for this group.
Last week, Anna Manz, Nestl é's chief financial officer, also mentioned that low-income Americans face a reduction in food vouchers, superimposed by rising prices, reducing their purchasing power by 50 per cent. However, she is more optimistic that as income increases in the next few quarters, the financial pressure on this group will also ease.
Ramon Laguarta, chief executive of PepsiCo, also said last week that he saw low-income people with "tight wallets" and was "working hard" to make sure their budget lasted until the end of the month.
K-shaped economy is becoming more and more obvious.
While Volkswagen consumer goods companies collectively sigh, consumer goods for wealthy consumers continue to show strength.
Molson Coors, the brewer, reported in its results this week that demand was strong thanks to "wealthy consumers willing to buy themselves more expensive beer".
Banks that can see credit card back-end data make a similar point of view. Citigroup CEO Jane Fraser said at the annual shareholders' meeting on Tuesday that he saw increasing pressure on low-income consumers. Spending on credit cards at retailers like Home Depot fell in the first quarter, but Citigroup's own credit card spending continued to rise.
Fraser says this is the so-called K-economy. While many consumers continue to spend money, delinquency rates on credit cards from low-income groups are growing and consumer behaviour is becoming more cautious.
Pessimism is on the rise.
The U.S. consumer confidence index fell to 97 in April, the lowest since July 2022, according to data released by the The Conference Board on Tuesday, indicating a decline in consumer confidence in the future labor market, business and economy.
Dana Peterson, chief economist of the Chamber of consultation, said rising prices, especially those of food and natural gas, are the top concerns for consumers.
In terms of inflation expectations, US consumers' inflation expectations for the next 12 months remain stable at 5.Crashdrive2online.3%, while expectations for the possibility of a recession in the coming year have risen slightly.
