Inflation's Winners and Losers

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Earnings for consumer staples and discretionary companies rely heavily on consumers' financial health and sentiment. The recent bout of high inflation and negative real wage growth is taking a mental and financial toll on many consumers. In this article, I explore consumer staple and discretionary companies to see how they are navigating the inflation storm.

The behavior of consumer staples and discretionary companies differ from what often occurs in a slowing economy. That said, almost everything over the past two years has been different.

The state of the consumer

Before walking through my analysis, it’s worth reviewing a few factors governing consumer spending.

Real wages (after inflation) have been declining for over a year.