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Octus on Credit: Tracking consumer spending the Octus way
Mark Fischer, Director of Credit Research, Americas Credit
Certain consumer segments might be reaching their limits in terms of purchasing power resulting in hard choices being made between leisure services and goods. At least that’s what is suggested by Octus’ bottoms’ up analysis of 150 consumer-facing public and private company financials.
Our analysis indicates a clear divide between luxury and economy-priced goods and services, with the former consistently outperforming. Bifurcation in apparel shopping within the middle segment of consumers either trading up or down has led to outperformance for luxury and off-price retail. However, the third-quarter 2024 luxury revenue decline could indicate consumers reallocating purchases to certain leisure activities and/or searching for bargains.
Results indicated a strong move-up preference in leisure activities as luxury hotels and activities outperform. Consumers continue to increase spending on cruise ships even in the face of higher pricing.
While overall consumer spending has trended back to a steady, low-growth environment, by segment, apparel, retail and home goods have experienced persistent negative growth while leisure and autos have offered resilience and strength.
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