With sky-high inflation, and a recession likely, consumers have had enough.
Retail sales fell 1% in December, and revised November data showed a 1% decline. Both are bad signs consumers are growing far more cautious, and that a recession is imminent.
Worse, “Consumers will have less support from surplus savings this year, which increases the risk that 2023 will be a tough year for economic growth,” LPL’s chief economist Jeffrey Roach said, as quoted by Business Insider.
That being said, investors may want to look at dollar store stocks, like Dollar General (DG) and Dollar Tree (DLTR). For one, both are recession-proof.
And two, with inflation showing no signs of cooling off, dollar stores are attracting higher-income shoppers. In fact, management at Dollar General say consumers earning $100,000 per year are helping drive growth as a challenge like inflation bites into their spending power.
“The consumer is trying to make ends meet, and when you have limited funds in your wallet, the dollar stores provide the ability to do that,” added Joseph Feldman, a senior analyst at Telsey Advisory Group, as quoted by The New York Times.