According to Target CEO Brian Cornell, the retailer is predicting a strong performance during the all important holiday season, even as the economy heads into uncharted waters.
At a recent finance summit Cornell said, “We continue to see a healthy guest shopping in our stores and shopping online,. We’ll see how they react throughout the holiday season, but when we talk to them they continue to say they want to celebrate the holidays.”
Following Cornell’s comments, shares were up 3%. However Cornell’s optimism aside, consumers continue to find themselves in a precarious economic condition heading into 2023.
As the Federal Reserve continues to hike rates in its war on inflation, the three major indexes are all down by double digit percentages for the year. So as consumers head out to spend, the bear market, combined with a falling housing market due to the Fed’s actions, is all weighing on their spending patterns.
Making matters worse is the fact inflation is hovering near 40-year highs, pressuring consumers to trade down and reduce spending. While Cornell noted the inflation, he also pointed out unemployment remains incredibly low, at 3.5%.
He added, “On one side, we have got inflation that is at a 40-year high, but unemployment is incredibly low — and I think those two things are balancing out right now.”
However the labor market is beginning to show isolated cases of weakness here and there. Reports are emerging that Intel is laying off thousands of workers as PC sales lag. Beyond Meat announced a 19% cut to its workforce. Facebook parent company Meta is reportedly beginning layoffs, and hiring freezes have become the norm among tech companies.
There were 29,989 layoffs announced in September by US employers, a 46.4% increase over August, according to outplacement firm Challenger, Gray & Christmas. That was a rise of 67.6% year over year.
September was also the fifth month this year that job cuts came in higher than the same month one year prior.
For now, Cornell says he is closely watching the Federal Reserve’s actions as it continues to battle inflation.
Cornell added, “We have got to watch it carefully. We have got to be agile, we have got to prepare for any environment.”
