Wells Fargo(US:WFC) Jin Shi Shu Ju·2025-07-21 11:38Core Viewpoint - Wells Fargo's latest report highlights a concerning recession signal hidden behind seemingly optimistic U.S. economic data, specifically a decline in discretionary service spending, which has only decreased during or immediately following economic recessions over the past 60 years [1] Group 1: Consumer Spending Trends - Discretionary service spending has been revised down significantly from an initial growth estimate of 2.4% to just 0.6% [1] - As of May, service spending has decreased by 0.3% year-over-year, with specific declines in transportation spending by 1.1% and a dramatic drop in air travel spending by 4.7% [1] - Households are delaying car repairs, reducing ride-sharing usage, and cutting back on air travel expenses, indicating financial strain [2] Group 2: Economic Growth and Inflation Insights - Despite stable growth in non-discretionary goods, the report suggests that this growth may be misleading due to preemptive purchases made before tariff increases [2] - Many companies have stockpiled inventory before tariffs took effect, allowing them to temporarily absorb cost pressures without passing them on to consumers [2] - The Federal Reserve is currently divided on economic outlook, with some members advocating for interest rate cuts due to weak employment data, while others believe the economy remains resilient [2]