People earning over $125K a year are three times more likely to be laid off than those earning under $50K.
In other words, the demographic that once had extra money to spend on home improvements is now the most likely to lose its source of income. That reality was reflected in Monday’s Home Depot (HD) earnings report.
“Home Depot talked about continued pressure in big ticket and discretionary categories being a hit to comps,” Jeremy McLean explains in this clip from The Call @ Hedgeye. “We think the next two to three quarters’ comps are likely to get worse. Demand for home improvement is under pressure, especially if we continue to see low existing home sale numbers.”
Our analyst Josh Steiner adds: “You’re seeing on the labor front the concentration of weakness hitting higher earners. For the most part, people spend their income. If they take a big step down, they might have savings to fall back on but that’s only a bridge so far. The data we’re seeing from Amex and others corroborates those comments out of Home Depot.”
Watch the full clip above.
