The U.S. consumer remains resilient, but is placing greater emphasis on value amid persistent inflation

Overview

This is a Bernstein macro and industry tracking report on the U.S. consumer in 2Q26. The core conclusion is that the U.S. consumer has not materially slowed, and consumer spending remains resilient; however, persistent inflation, rising gasoline prices, pressure from food and services prices, reduced SNAP spending, and the return of student loan repayments are making consumer behavior more value-seeking. Lower-income groups are under the greatest pressure, while categories tied to higher-income consumers and companies with scale, pricing power, or low-price positioning are relatively better placed.

Core views

The report argues that U.S. consumption is showing a 'K-shaped' divergence: lower-income consumers are being hit by inflation, reduced benefits, and declining confidence, while spending tied to higher-income consumers remains relatively solid. Value retail, warehouse clubs, discount retail, selected premium or off-price apparel retailers, beverage companies with brand or category advantages, and scaled food distributors are more likely to benefit. By contrast, home improvement, some food companies, slower-growth alcohol categories, and consumer settings with greater exposure to lower-income customers face more pressure.

Analysis framework

The report primarily uses a macro indicator dashboard and cross-industry validation, tracking employment, disposable income, SNAP, student loans, CPI, gasoline prices, population growth, PCE, retail sales, savings, consumer confidence, housing turnover, and home improvement demand, and then mapping these to investment implications for retail, restaurants, food distribution, alcohol, food, beverages, and HPC.

Methodology notes

• Macro trackingConsumer macro indicator scorecard

  Quarterly comparison of employment, income, inflation, consumption, sentiment, retail, and housing indicators across 2Q26, 1Q26, 4Q25, 3Q25, and 2Q25.

  This framework is used to assess the health of the U.S. consumer and the direction of its transmission into industry demand.

• Industry mappingMacro-to-consumer sector investment implications

  Maps changes in inflation, income, gasoline, housing, and consumer confidence to sectors such as retail, restaurants, food and beverages, and home improvement.

  The report screens for relative beneficiaries and pressured names through customer mix, price points, category structure, and cost exposure at both the industry and company levels.

• Consumer segmentationK-shaped consumption divergence

  The divergence between higher-income and lower-income consumers in confidence, purchasing power, and category choices.

  Lower-income consumers are more heavily affected by gasoline, food, SNAP changes, and inflation expectations, while exposure to higher-income consumers is viewed as more defensive.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• WMT, COST, dollar stores

  Beneficiaries of value-oriented consumption

  Strengths

  When consumers seek value for money, low-price, membership-based, and high-frequency consumption channels have relative advantages.

  Weaknesses

  DG and WMT have higher exposure to lower-income consumers, and pressure on lower-income groups may limit demand elasticity.

  Comparison

  Compared with general retail and discretionary consumption, these are better aligned with the current value-oriented backdrop.

  Risks

  Further deterioration in lower-income consumers' purchasing power and inflation eroding real consumption.

• TJX, TPR

  Preferred names in apparel and specialty retail

  Strengths

  The report says both have market share gains and upward earnings revisions, making them more attractive after share price pullbacks.

  Weaknesses

  The broader sector is still affected by discretionary spending sentiment and slowing demand.

  Comparison

  They offer greater short-term certainty than athletic apparel names relying on transformation or demand recovery.

  Risks

  Consumers cutting discretionary spending, or rising inventory and promotional pressure.

• ADS, ONON

  Long-term opportunities but weak near-term sentiment

  Strengths

  The report believes some athletic apparel names offer attractive long-term opportunities, with the September investor day potentially serving as a catalyst.

  Weaknesses

  Q2 demand was soft, and investors have limited appetite for transformation stories.

  Comparison

  Near-term visibility is weaker than for TJX and TPR.

  Risks

  Transformation progress falling short of expectations and delayed demand recovery.

• DRI, SBUX, CMG, CAVA

  Relatively constructive names in restaurants

  Strengths

  DRI benefits as consumers compare restaurant steak prices with still-elevated grocery beef prices; SBUX, CMG, and CAVA have higher-income consumer exposure and company-specific drivers.

  Weaknesses

  The restaurant sector as a whole still faces lower-income pressure, elevated beef costs, and the impact of the Cyclospora outbreak.

  Comparison

  Higher-income customer exposure and brand-driven models are preferable to restaurant companies that rely more on lower-income traffic.

  Risks

  Weak traffic, continued food cost inflation, and broader food safety incidents.

• USFD, PFGC, SYY

  Scale-advantaged beneficiaries in food distribution

  Strengths

  Inflation and freight pressure reinforce scale advantages; while soft traffic is a mild headwind for case volume, it does not alter their relative advantage.

  Weaknesses

  Weak restaurant traffic will weigh on case volume.

  Comparison

  Large distributors are more resilient than smaller or less-scaled participants.

  Risks

  Further weakening in restaurant demand and blocked cost pass-through.

• STZ, BUD, DEO

  Relatively constructive names within alcohol

  Strengths

  STZ benefits from accelerating market share gains, BUD remains favored, and DEO is of medium-term interest, with its management day set to focus on affordability initiatives.

  Weaknesses

  The macro environment is a headwind for alcohol, as consumers prioritize affordability.

  Comparison

  They are relatively more attractive than TAP, SAM, and BF.

  Risks

  Weak growth in beer and spirits, margin compression, and consumer downtrading.

• MDLZ, SJM

  Preferred names in U.S. food

  Strengths

  The report prefers MDLZ and SJM based on international and category exposure.

  Weaknesses

  Converging inflation between FAFH and FAH may marginally pressure grocery traffic, and SNAP reductions are beginning to have an impact.

  Comparison

  They are better positioned than food companies that struggle to absorb a new round of inflation.

  Risks

  Consumer price sensitivity staying high and a rebound in raw material costs.

• CELH, KDP

  Preferred growth names in beverages and HPC

  Strengths

  They have strong functional beverage portfolios, and their subcategories are growing faster than the overall beverage market.

  Weaknesses

  Overall beverage growth slowed from about 6% in Q1 to about 4% in Q2.

  Comparison

  Growth performance still leads most consumer categories and HPC.

  Risks

  Further slowing in category growth and valuation sensitivity to growth expectations.

• Home improvement, HD, LOW

  Neutral stance on the home improvement sector

  Strengths

  Some home improvement demand is linked to long-term maintenance of the housing stock, and LOW is rated Outperform.

  Weaknesses

  Potential rate hikes, elevated mortgage rates, and inflation are weighing on consumer confidence and housing turnover.

  Comparison

  Short-term macro sensitivity is higher than for value retail and staples consumption.

  Risks

  Continued weakness in housing transactions, rates staying high, and slowing home improvement spending.

Key data

• CPI3.5%+The report says gasoline prices have eased but remain elevated, keeping CPI above 3.5%.
• 10-year U.S. Treasury yieldover 4%Supported by persistent inflation, the 10-year Treasury yield remains elevated.
• Food inflationaround 3% YoYFood CPI has been running at about 3% YoY over the past year.
• At-home food inflation~2.7% to 2.9%Recent at-home food inflation is about 2.7%, while an LTM measure shows 2.9%.
• Cumulative inflation33%From January 2019 to June 2026, cumulative inflation for all items was about 33%.
• Cumulative food inflation36%From January 2019 to June 2026, cumulative food inflation was about 36%, driven by dining out and meat, among other factors.
• General merchandise cumulative inflation17%Excluding food and energy, core goods used as a proxy for general merchandise saw cumulative inflation of about 17%.
• Beverage category growth~4% YoY in Q2Beverage category growth slowed from about 6% YoY in Q1 to about 4% in Q2, but still outpaced most categories.
• HPC growth~2.5% YoY in Q2HPC slowed from about 3.5% in Q1 to about 2.5% in Q2, performing more like an everyday staples category.

Impact & implications

From an investment perspective, positioning should favor three types of assets: first, WMT, COST, and dollar stores, which can meet demand for value; second, TJX, TPR, SBUX, CMG, and CAVA, which benefit from higher-income customer exposure or company-specific catalysts; third, USFD, PFGC, SYY, CELH, and KDP, which have scale or portfolio advantages. Investors should avoid or be cautious on companies and sectors with greater exposure to lower-income customers, the home improvement cycle, slower-growth categories, or cost pressure.

Risks

• Inflation pressure lasts longer than expected, further weakening real purchasing power.
• Gasoline and food prices rise again, depressing consumer confidence and crowding out discretionary spending.
• Pressure on lower-income consumers broadens, dragging on discount retail, restaurant, and food demand.
• Interest rates and mortgage costs remain elevated, suppressing housing turnover and home improvement demand.
• Reduced SNAP spending, student loan repayment pressure, and slowing credit growth may undermine consumption resilience.
• Food safety incidents, rising raw material prices such as beef, and freight pressure may erode restaurant and food distribution profits.

What to watch

• YoY changes in CPI and its food, energy, and general merchandise components.
• Average U.S. gasoline prices and regional differences, especially gasoline inflation in the Southern US.
• Income-tier changes in unemployment, real per-capita disposable income, and consumer confidence.
• Changes in total SNAP spending, participation, and average benefits.
• The share of student loans moving from pause, forbearance, or deferment into repayment or default.
• Shifts in the shares of services, durables, and nondurables within PCE.
• Retail sales, restaurant traffic, and the inflation gap between food at home and food away from home.
• 10-year Treasury yield, mortgage rates, HELOC rates, housing transactions, and home improvement spending.
• Company catalysts such as the September ADS and ONON investor days and the August 6 DEO CMD.