Markets close higher, small business optimism hits 5-month high, what's driving the consumer

Market Trends & Investment Landscape - Stocks rallied after CPI data release, with major indexes closing higher [1] - Retail investment volumes increased by 23% in the first half of the year compared to 2024 [4] - Brick-and-mortar stores are performing well, accounting for approximately 80% of total retail sales in America [15] - Small business optimism index rose over 1.5 percentage points in July, driven by improved business conditions and expansion plans [40] Consumer Behavior & Spending - US consumers continue to spend, but are shifting towards value retailers like Walmart, TJX, Marshalls, and Dollar General to maximize their dollar [4][5][7] - Consumers are prioritizing essential spending for back-to-school and holiday shopping, rather than discretionary purchases [9] - The top 20% of household income earners in America account for approximately 50% of all consumer spending [24] - Amazon Prime's four-day sales reached $24 billion, exceeding Black Friday sales [18] Economic Factors & Challenges - Labor market softness is causing consumers to feel a pinch and seek better value for their money [6][7] - Retailers are absorbing tariff costs to avoid scaring off consumers with price increases, potentially impacting their bottom line in the short term [19][20] - Concerns exist about the potential impact of tariffs on small businesses and the need for deregulation [43] - There's a growing adoption of AI among small businesses, with adoption rates increasing from 7% to almost 26% [49]