![]() Similar to Goldman's take, it's the middle-income consumer that will feel the biggest impact as "counterintuitively, lower-income consumers are least exposed, due to income-driven repayment protections in place." Stores with middle-income consumer bases that don't offer a fantastic value will be hardest hit since they will feel most of the resumption of loan repayments (and decline in mortgage equity). ![]() Off-price, luxury and sportswear will be least impacted, and department stores and durables most affected. ![]() The analysts estimate a 2% total impact to the apparel and footwear sector but smoothed over the next 12 months with high variance amongst winners and losers. Another note, published by Bernstein analysts on Wednesday, attempts to quantify this headwind. Bernstein on student loan impact Adding to the complexity of the retail landscape, student loan repayments are resuming, a dynamic many worry will further pressure an already tight consumer budget. As a result, Goldman said, "This leads to forecast accelerated spending growth on discretionary items in 2024 with the acceleration expected to be evident beginning in 4Q23." Consumer discretionary stands to win at the expense of consumer staples. Equally important, total household cash inflow in 2024 is expected to accelerate to 5.5%, up from 3.2% in 2023, "as the decline in mortgage equity withdrawals normalizes." At the same time, they expect spending growth for essentials to slow, thereby leaving more money left over for discretionary purchases. ![]() That's down from an expected 7.5% increase in 2023 but still a healthy number. Goldman economists expect nominal (meaning not adjusted for inflation) disposable income growth of 5.5% in 2023. As was the case in 2023, investors who do the homework and differentiate between names that cater to the consumer will be better rewarded than those simply looking to buy a basket of names. Goldman Sachs: 'Messaging to be mixed' In a note published Tuesday, analysts at Goldman Sachs said they expect "messaging to be mixed" from retailers as some lose market share while others gain, but that the overall spending is "more resilient this year than many investors had expected." In their view, "aspirational purchases" are going to remain pressured while "value-oriented channels" continue to do well as middle-income consumers have come under pressure and continue to seek out the best bang for their buck. Three research notes released this week attempted to answer who the winners and losers will be. However, the prioritization of that spending will result in winners and losers. economy, accounting for 68% of gross domestic product - and several analysts on Wall Street forecasted that spending will remain strong through 2024. The consumer is expected to remain resilient this year, but some retailers will benefit more than others. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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