The threat of inflation weighing on consumer demand is especially evident among consumers with lower-to-middle incomes. Macy’sAccording to some, more customers could face a difficult choice.

Adrian Mitchell, Macy’s chief finance officer and the head of Macy’s Retail Round-Up, stated that the biggest problem in managing the year 2022 was where will the demand come from.

He said, “We believe that the demand exists.” The consumer will be spending, we believe. However, are they spending discretionary goods that we sell? Or are they spending money on flights to Florida or traveling or eating out at restaurants more often?”

Mitchell explained that Macy’s has to be careful about this unpredictability. The retailer won’t order beach covers or luggage if this isn’t what customers are spending on during the summer.

It would not be the only one trying to navigate this tricky environment, as there are many signs of recession. Economists at Deutsche Bank said this weekInflation spreading and necessary interest rate increases to counter it will likely send the U.S. into a recession by 2023. Recent flashes of a bond market showed a classic recession indicatorIn which the 2-year Treasury yield exceeds the 10-year note. 

Some Americans will be forced to make sacrifices to save money, particularly those working at lower wages. Some Americans might choose to spend their hard-earned money on a concert or vacation over buying a handbag or a swimsuit.

Already, some early inflation tradeoffs have taken place. according to one report. According to Numerator’s Shopping Behavior Index data, average consumer spending at convenience and gas stations is 59% higher than it was a year before. The increases are most pronounced for low-and-middle-income tiers, it said. The biggest drops in weekly unit sales are being experienced by discretionary spending categories like home improvement and beauty, according to Numerator.

Levi Strauss & Co.CNBC spoke with Chip Bergh on Wednesday, stating that the CEO of CNBC had not noticed consumers choosing less-expensive goods amid rising inflationary pressures. But that hasn’t stopped CNBC from observing that strong demand for denim has continued. To be sure, Bergh said some consumers have just started to dip into their savings accounts for extra cash — a trend Levi is monitoring closely. “We don’t have our head in the sand,” he said.

Macy’s was unable to update its outlook for the full year, but Levi felt confident enough to reaffirm it. the 2022 financial forecast it gave back in FebruaryThis calls for sales to remain flat at 1%, compared to 2021 levels.

Macy’s reported Thursday that they have observed a decrease in casual wear and certain home products since the peak of pandemic. It also said that weddings are rapidly picking up, which is expected to boost sales for dresses, cosmetics, and tailored clothing for men.

Mitchell insisted that Macy’s was still prudent.

He stated that even though consumers are healthy, inflation has risen more than we anticipated coming into the year. We also acknowledge that supply chain disruptions cannot be solved.

NordstromAt the J.P. Morgan Retail Event this week, Erik Nordstrom also noted that his typically wealthy customer base does not tend to spend less or more as gasoline prices fluctuate. The stock market tends to correlate more closely with the performance of its business, said CEO Erik Nordstrom.