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Is the economy falling off a cliff, headed for a slow landing, or just getting ready to take off is a question that every investor is looking for an answer to these days, and when it comes to gauging the health of the economy, the first direction investors turn is towards macro data from various government agencies and other trade groups. These are always helpful, but they’re usually backward-looking and prone to revisions. Since the macro backdrop is made up of millions of various micro inputs, we find that it’s helpful to go right to the source and listen to and read through earnings season conference calls of individual companies.

Throughout the earnings season, we listen to and read through the conference call transcripts of individual companies reporting. We then publish summaries of the key calls and cover the main micro and macro trends discussed on each call. With conference calls lasting an hour or more, these one- or two-page summaries which take just a few minutes to read are a great time saver for investors. To view the latest summaries, or learn how to get access, check out our latest 

It’s in a company’s best interest to present themselves in the best possible light during each quarter’s call, so you’ll often hear company executives look to spin whatever is going on with their businesses in the best light possible. Getting the true picture of how a company’s business is operating requires investors to look past some of the jargon, but companies don’t have nearly as much incentive to put “lipstick” on their view of the US economy. If anything, it’s in their interest to downplay any economic strength because it would either justify whatever lackluster results they report or make their good results look even better.

The pace of earnings season doesn’t pick up in earnest for another couple of weeks, but we’ve already started to see some results from key companies in various sectors and based on their macro-related commentary within their quarterly calls, the economic picture they draw is that while the economy hasn’t been particularly strong in recent months, it has been stable with a bifurcation between higher and lower-income consumers. A couple of trends that stood out were the fact that consumers remain confident about their employment and wage growth has been steady. That sounds great, but those higher wages translate to higher costs which companies say are starting to become more entrenched. Below we have provided some snippets of various macro-related commentary from these calls, and one topic that was notably absent (mostly) was a discussion of supply chain issues. Based on the commentary of companies reporting so far, whatever supply chain issues that were persisting have largely been resolved.

To give you an idea of some of the macro topics discussed so far this earnings season, below we have provided a key blurb from some of the calls. While some companies discuss the macro backdrop more than others, in the interest of space, we limited each company to one blurb.

Autozone (AZO)

• “We haven't seen to this point, sort of a wobble from the consumer. We think it's been a two-speed world for a while where the low-end consumer has been under some pressure, but consumers that have higher incomes have been doing well.”

Citigroup (C)

• The growth in spending is decelerating, and the consumer is more mindful what they spend on.”

Conagra Brands (CAG)

• “After three years of unprecedented inflation, along with other macro dynamics, consumers have felt increased financial pressure and used a variety of strategies to stretch their balance sheets. This resulted in a near-term reprioritization of their typical purchase behaviors.”

Dave & Buster’s (PLAY)

• “[Consumers] are spending at consistent levels of what we historically have seen in that post-COVID environment.”

Delta (DAL)

• “We are seeing the structural step up in operating costs.”

JP Morgan (JPM)

• “Currently, U.S. consumers and businesses generally remain healthy, although, consumers are spending down their excess cash buffers. However, persistently tight labor markets as well as extremely high government debt levels with the largest peacetime fiscal deficits ever are increasing the risks that inflation remains elevated and that interest rates rise further from here.”

Lamb Weston (LW)

• “In the US, overall restaurant traffic was flat versus the prior-year quarter as QSR traffic growth offset further traffic declines in full-service restaurant channels.”

Lennar (LEN)

• “Two years of 500,000 apartment starts per year are now being delivered and creating supply increases and, in some geographies, excess supply, which are moderating rental rates.”

MillerKnoll (MLKN)

• “We're still in the early period of recovery, and our business segments reflect varied economic conditions around the globe. Right now, we have cause for both enthusiasm and vigilance.”

Nike (NKE)

• “We continue to see consumer demand for our brands and for our products to be very, very strong. Sport is growing and the consumer is proving to be resilient.”

PepsiCo (PEP)

• “The things that I usually look at with the consumer to detect whether there is high stress, we see good results in.”

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