The spending slowdown is coming. Stocks should brace for impact.

, offer undervalued opportunities for the long-term investor, according to Morningstar chief US market strategist, David Sekera.

"What I'm looking at is a change in composition for consumer spending," Sekera told me."As the pandemic gets further in the rearview mirror, consumer spending is shifting back into services from goods. We expect to see that in the future, so investors should continue to look for the undervalued opportunities in the services sector."

He noted that Morningstar does not have a recession as its base scenario, but that growth will slow sequentially over the next several quarters before rebounding in 2024 as the Fed eases policy. While stocks could stumble in the near-term as corporate earnings deteriorate in a spending slowdown, the economy could actually stand to benefit as far as recession concerns.

Less spending leads to a cooler economy, which could limit further Fed tightening, and eventually curtail a potential downturn. The Fed has been laser-focused on areas of strength where it still sees things running too hot, like housing and consumer spending. If consumers pull back, inflation could cool further, leading the Fed to conclude that it's policy tightening has had its intended effect.

"Restaurants, bars, hotels — if people spend on these things less, that puts downward pressure on hiring in the services sector, which should reduce service inflation, which the Fed has been trying to do," Goldman said."If we look at where inflation has been, it's really on the services side of the economy. A slowdown here could mean the Fed is more likely to pause."

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