Global 2024 Consumer Discretionary Outlook: Pressures on Consumer Purchasing Power Continue to Weigh on Earnings

While the global macroeconomic environment remains uncertain, our outlook for companies in the consumer discretionary sector is negative for 2024. This reflects our expectation that pressures on consumer purchasing power because of significant interest rate hikes—whose effects have not yet been fully felt—coupled with the compounded effects of easing inflation will constrain consumer spending.

-- Our negative outlook acknowledges the challenging global operating environment that we expect will change consumer spending habits and affect demand for consumer discretionary products.
-- We expect credit ratings to be pressured in the near term.
-- Our outlook is largely consistent across all geographies.

“We expect consumers will be increasingly reluctant to spend on discretionary products in 2024, with big ticket/higher-priced products likely to be especially affected. Furthermore, we believe that consumers will be increasingly diligent in shopping for sales and promotions as well as looking to trade down to lower-priced brands or value-based substitute products. As such, we expect volume contractions across the spectrum of discretionary products, albeit to different extents, in 2024,” said Reid Usher, Assistant Vice President, Diversified Industries.