Although the U.S. stock market hit a record high in 2025, the reality for the average consumer is not entirely smooth sailing. The Consumer Confidence Index has fallen to its lowest point in three years, matching the levels seen during the 2022 bear market trough. At the same time, the labor market is showing signs of weakness, with job growth stalling in recent months and a sharp increase in layoffs in October, indicating that economic pressures are impacting the public from multiple fronts.
This pressure is already directly reflected in consumer behavior. Sales growth has slowed significantly for many non-essential consumer goods companies. Fast-food giant Chipotle, premium athletic apparel brands Lululemon and Deckers (parent company of Hoka and Ugg) have not been spared. Chipotle’s CEO, Scott Boatwright, pointed out that visit frequency by middle- and low-income customers continues to decline, with the spending power of customers aged 25 to 35 “facing particular challenges.” Even the tobacco industry is affected; Altria Group reported an increase in the market share of discount cigarettes, which its CFO, Salvatore Mancuso, attributed to adult smokers facing “pressure on discretionary spending” and the “compounding effects of inflation.”
Consumer spending, being the main driver of the U.S. economy and accounting for about 70% of GDP, makes its current divergent trend noteworthy. In contrast to the widespread weakness, the travel industry remains strong. Expedia reported third-quarter results far exceeding expectations and raised its full-year outlook; cruise lines like Carnival Cruise Line and airlines continue to report record demand and revenue. This is because the travel industry relies more on high-end consumers and business travelers and is less sensitive to fluctuations among lower-income groups. However, if pressures on lower-income individuals and labor market weakness persist and intensify, it could trigger a broader economic correction. This is particularly relevant given the current historical highs of the S&P 500 index, making market vulnerability a concern not to be overlooked.
Against the backdrop of overall weak consumption and an economic slowdown, those “counter-cyclical” companies emphasizing value-for-money may find opportunities. Dollar General (DG) is one such company. As a discount retail giant with over 20,000 stores in the U.S., it often performs better during economic downturns. Historical data shows that in fiscal years 2009 and 2010 (following the financial crisis), its comparable store sales growth reached about 9%, significantly higher than the 1.9% in the pre-crisis fiscal year 2008. Currently, the company is in a transition phase, optimizing its supply chain and improving store services to compete for market share. Its second-quarter earnings report showed a 2.8% increase in comparable store sales, growth in both revenue and earnings per share (EPS), and consequently, an upward revision of its full-year performance forecast. Based on its current EPS expectations, its price-to-earnings ratio is approximately 16.5 times, representing a relatively reasonable valuation. Investors will gain more information when its third-quarter earnings are released on December 4th. If the trend of weak consumption continues and the company’s performance can exceed expectations, Dollar General has the potential to become a noteworthy pick in the current uncertain market.
