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Stronger than expected results from Walmart and a hot retail sales print helped ease some worries about the health of the US consumer last week. But with a closer look inside those reports showing that shoppers are still hunting for deals, is the consumer actually weaker than the headline number suggests. Here to discuss, we want to bring in Michael Baker, he's DA Davidson senior analyst. Also joined by Brian Gildemberg, managing director at retail cities. It's a global retail data and insights firm. Great to have both of you, Michael and Brian. Michael, let, let me start with you, when we're trying to figure out the strength of the consumer right now or the weakness of the consumer. It almost looks like you can pick out from a number of data prints to support any sort of argument that you're trying to make. So I'm curious, just from your perspective, what is your assessment of the consumer at this point?

Yeah, we think the consumer is slowing. We're, we're in the weaker camp. In fact, we wrote a report. We called it a mid-year theme update a couple weeks ago where we cut all of our numbers for the second quarter and said most retailers will guide down for the back half as we are seeing enough signs of slowing. We did say at that point that there's going to be an exception, one big exception, is going to be Walmart. They're going to take market share. So their really strong number was a function of market share, not necessarily the strength of the consumer. The retail sales number that came out last Thursday was a little bit stronger than expected, but we do think there's some calendar issues in there in terms of more weekend, more weekday days in this July versus last July, the reverse of what happened in June. Remember June, so July was better. June was very weak. When you combine the two months, we're growing about 3%. That's below average. Usually retail grows 4% a year. So it's definitely a slowing environment, we think, uh, despite those data points from last week.

Ryan, we'd love to hear your perspective, especially considering that Walmart is such a behemoth that there's pockets and and aisles that may be analogous or applicable to other spaces within retail, but not all of it.

Well, yeah, I think Walmart sells a wide range of things and to a wide range of people. Um, I think there's a couple of things that are important to keep in mind. Number one, July is an unusual month in that, um, I think a lot, I think, yes, the calendar was an issue, but I also think Prime Day was a big deal in there. Amazon's Prime Day and the, uh, and the selling that went around it, notably from Walmart and Target, I do think actually had a material impact on, uh, on retail performance across the board. And I think probably helped Walmart and will also help Target in discretionary spend going into when they report this week. I think the other thing to keep in mind is like, look, if you compare and contrast Walmart, Home Depot and Amazon, or the three biggest retailers that have reported, you know, Walmart was pretty, was relatively consistent on the consumer. Home Depot to parallel the shop, the guest you had on earlier. Home Depot really wasn't talking about trade down. They're talking about trade out. People have just stopped spending on high ticket discretionary, uh, projects. I think a lot of that is due to the nature of inflation in the US right now, which is so shelter centric. The CPI at 2.9% last month was almost entirely driven by increases in shelter costs. And a lot of those are deeply regional, and a lot of those are being constrained by higher interest rates. So I think it will be interesting to see over time as the Fed lowers interest rates or tries to, but I think still do. Um, how that, the impact that that has on liquidity in the housing market, the impact that that has in unplugging the log jam at the top of the rental market. And I think that'll help retailers that are selling to renters that are trying to make ends meet, uh, in places like Virginia Beach, DC, Chicago, and Houston, where rents are basically up double digit year over year. So I think there's a lot to watch.