As the market enters correction territory, don't blame the American consumer

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From Amazon to auto sales and new homes, the consumer is spending more and holding up better than the market selloff suggests.

The S&P 500 is on the verge of a correction and the Nasdaq already entered one, but many consumer earnings data points show a mostly bullish picture.

"People are kind of scratching their heads and saying, 'The consumer is holding up better than expected,'" said CFRA Research strategist Sam Stovall said. "Consumers are employed. They continue to buy goods as well as pursue experiences. And they don't seem worried about debt levels."Deckers Outdoor Wells Fargo economist Jackie Benson said in a report that builders may struggle to keep this strategy going if mortgage rates stay near 8%, but new-home prices have dropped 12% in the last year. In her view, incentives plus bigger price cuts than most existing homes' owners will offer is giving builders an edge.

Despite the fact that U.S. household debt burdens are almost exactly the same as in late 2019, and declined during the quarter, according to government data, Discover chief financial officer John Greene said on its call, "Our macro assumptions reflect a relatively strong labor market but also consumer headwinds from a declining savings rate and increasing debt burdens.

This follows a trend now well-entrenched in the economy: people stocked up on hard goods, especially for the house, during the pandemic, when they were stuck at home more. All three companies saw shares surge during Covid, and growth has slacked off since as they found their markets at least partly saturated and consumers moved spending to travel and other services.

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