Overall consumer trends remain relatively stable, says Morgan Stanley's Simeon Gutman

Core Insights - Overall consumer spending trends remain stable, although there was a deceleration in October, influenced by various factors including tariffs and weather conditions [1][2][3] Consumer Spending Trends - Consumer spending has been uneven throughout 2025, with a tough start to the year due to adverse weather and tariffs, followed by concentrated spending in the summer months [2][3] - October data indicates some volatility in consumer spending, but overall, consumers appear to be managing their expenditures despite challenges [4][5] Category Performance - Spending is occurring across various categories, with consumables like groceries and dollar stores showing stable spending levels despite unit declines due to tariff-induced price increases [5][6] - Categories such as consumer electronics, sporting goods, and home furnishings are performing well, with home furnishings experiencing significant same-store sales growth [6][7] Consumer Sentiment - A recent consumer survey indicated a 10-point increase in consumer concern regarding tariffs, reflecting heightened awareness as the holiday season approaches [8][9] - The upcoming tariffs are expected to impact pricing in retail, which may influence consumer behavior in the near future [9] Investment Opportunities - Walmart is identified as a strong investment opportunity due to its increasing market share and ability to grow margins, particularly in general merchandise categories [10][11] - Costco is also viewed favorably as a stable option, appealing to higher-income consumers and benefiting from its monthly sales model [11][12] - Home improvement retailers like Home Depot are considered interesting plays, especially if demand rebounds with favorable mortgage rates [12][13]