Home Depot says customers are curtailing their spending habits due to higher interest rates and economic uncertainty.
The retailer’s reported sales for the second quarter of this fiscal year declined 3.3% compared to this time last fiscal year. Net earnings also shrank by $100 million, according to the company.
“During the quarter, higher interest rates and greater macroeconomic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects,” CEO Ted Decker said during an earnings call.
The federal funds rate, which is the target interest rate set by the Federal Reserve, is 5.3%. Federal Reserve Chair Jerome Powell projected two weeks ago that he could lower the rate if inflation continues to fall, but added that “We’re not quite at that point.”
Home Depot’s operating income, which is its profit after subtracting operating expenses, also decreased by $100 million from the last fiscal year. In April, a Gallup poll found that economic confidence dropped for the first time since October, with 44% of Americans saying the economy is in poor condition.
Fewer respondents to the poll thought the economy was improving despite a slight decrease in inflation. The consumer price index, which measures inflation, decreased by 0.1% from March. Since the start of this year, the index has declined from 3.1% to 2.9%.
13% of Americans think the economy is the most important issue facing the country, according to a separate Gallup poll. The issue ranked behind “the government/poor leadership” and “immigration.”
The Biden administration has praised its efforts to grow the economy, with President Joe Biden asserting earlier this month that while “prices are still too high,” he and Vice President Kamala Harris will “keep fighting for the future.”
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