The American Consumer Is Slowing Down. Domino’s, Delta, and Walmart Are All Seeing the Same Data.

Domino’s was meant to be the business that remained unflinching. Wall Street told itself this narrative for years: pizza is inexpensive, it travels, and it succeeds in difficult economic times. Then, early on April 27, the chain reported its first quarterly U.S. miss in a year, predicted lower annual same-store sales, and saw its stock drop by almost nine percent before lunch. Investors who had previously believed that Domino’s was immune to the recession were now reading the transcript of the earnings call twice.

It was a modest and unglamorous number. In the first quarter, U.S. same-store sales increased by 0.9 percent, significantly less than the 2.72 percent that analysts had predicted. Russell Weiner, the CEO, said on the call that consumer sentiment had reached COVID-era lows in March, that pressure had increased throughout the quarter, and that the $9.99 “Best Deal Ever” promotion hadn’t drawn customers back as it was supposed to. Weiner tends to sound steady even when he isn’t. As you listen to him, you get the impression that the business made every effort but was unsuccessful.

If Domino’s were the only ones speaking, it would be simpler to write this off as a Domino’s issue. It isn’t. According to Walmart’s CFO, American consumers are more “choiceful”—business jargon for a household that returns the second box of cereal to the shelf. Even though premium cabins are holding up, Delta and the major airlines have been warning for months that demand is waning on the leisure end. These businesses don’t sell the same products. They are all observing the same wallet slightly close.

The macro data hasn’t fully caught up, which makes the moment peculiar. GDP continues to rise. There is little unemployment. According to FactSet’s count, corporate margins are almost at their highest point since 2009. According to any textbook reading, American consumers ought to be alright. However, according to a Gallup poll conducted this spring, 55% of Americans think their financial circumstances are getting worse, which is the highest percentage since the survey’s inception in 2001. The sentiment index for the University of Michigan is 49.9. Over time, people’s perceptions of their own poverty become reflected in the spreadsheets.

It includes the conflict with Iran. At $4.50 a gallon, gasoline has the ability to alter the rest of the household budget. A tank of gas that costs an additional $15 per week is $15 that doesn’t go toward a Friday-night pizza, a checked bag, or the grocery store’s impulse section. On the call, Weiner essentially stated the same thing in more cautious terms. His numbers haven’t yet fully reflected rising fuel prices. He believes they will.

Here, there’s a pattern worth observing. Businesses that deal with the majority of American transactions, such as a Friday pizza, a June flight, or a Saturday grocery run, are typically the first to notice a change. Weeks later, when the retail sales data arrives, economists can see it. The CEOs have already been on the call by then, sounding cautious as they hedge the year. As this develops, it’s difficult to avoid thinking that the slowdown is no longer a forecast. It’s already taking place. How deep it goes and whether buybacks, deals, and rewards program adjustments are sufficient to maintain the status quo until sentiment shifts are the questions. Whether it will turn this year at all is still up in the air.