Consumer spending in the US has held up, even in a year rocked by economic volatility, but one Wall Street investment chief says there are reasons to be cautious.
Shannon Saccocia, CIO of Neuberger's wealth division, isn't convinced that the current consumer spending strength will continue. Speaking with Business Insider this week, she said her team sees a strong possibility that investors are underestimating the risks to consumer-facing sectors, and there's one key signal that they should be watching: inventory.
"Attempting to use promotional prices to clear inventory, that's always a concern in terms of being able to clear that inventory," Saccocia said.
Over the last year, many companies have warned of pressures they are feeling from inflation, spurred in part by the lingering effects of President Donald Trump's tariffs and the US-Iran war. In many cases, this has meant raising prices, for everything from shoes to auto parts.
In an economy marked by persistent inflation since the peak in 2022, consumers have less buying power. The market has already priced this in, but as Saccocia noted, when pressure becomes visible in companies' inventories, it should be regarded as a stronger warning signal for investors.
"I think that consumer companies have been cautious already given higher inflation, and they acknowledge that there is a bifurcation or K-shape in terms of the existing consumer footprint," she said. "It would be more clear evidence if promotional activity would be necessary to clear inventories that are otherwise not being consumed by US consumers."
Discounts and promotions proved a pillar of retailers' strategies during the holiday shopping season of 2025. Many shopping chains opted to market affordability and promote lower prices in an attempt to draw cautious consumers back to their stories.
However, earlier that year, GAP Inc CEO Richard Dickson claimed that the clothing chain was finished "bombing" customers with promotions. A Business Insider investigation found significant price swings in clothes from Old Navy, a popular chain owned by Gap.
As Saccocia highlighted, though, trends point toward a potential slowdown in spending from consumers, despite the numbers that show resilience. If that proves to be the case, the risk to consumer-facing sectors of the market is likely to rise, and investors may not be properly pricing that in yet.
"Given the fact that the US consumer is such a meaningful part of economic growth, continued dampening of consumer confidence, along with indications that spending is ticking lower, could lead to more sour sentiment, not only for consumer stocks, but for the broader market in general."
