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Investing.com -- Consumer sentiment showed signs of improvement in the second quarter, driven by a softening tariff outlook and a resilient equity market, according to KeyBanc Capital Markets’ latest consumer survey.
Conducted between June 18 and 25, the survey polled over 1,000 U.S. consumers and captured the mood following the Trump administration’s “softer stance on tariffs” and the recent rally in financial markets.
“Spending improved for middle- and higher-income respondents, while decelerating slightly for lower-income respondents,” KeyBanc noted, adding that financial confidence hit its highest level since the second quarter of 2021.
Back-to-school expectations were also upbeat, with 57% of respondents planning to spend more than last year. Spending intentions on categories like groceries, autos, travel, and home improvement rose, particularly among higher earners.
“Intent to buy a home increased significantly... driven by an improvement from middle- and higher-income respondents,” the analysts said, with home remodel and electronics spending also gaining momentum.
However, caution remains. Tariffs are said to continue to be a key concern for consumer goods, with a July 9 deadline looming that could reintroduce volatility.
“The environment remains choppy,” said the firm, adding that easing tariff noise could support the balance of the year.
Retailers Walmart (NYSE:WMT) and Ollie’s Bargain Outlet were cited as potential share gainers, while furniture names like La-Z-Boy (NYSE:LZB) and Williams-Sonoma (NYSE:WSM) could benefit from a demand rebound.
In softlines, athleticwear and footwear demand remained resilient, with Nike (NYSE:NKE) showing early signs of a comeback and On Holding gaining share. For restaurants, consumer demand was steady, but inflation continues to push diners toward value-focused brands.
KeyBanc concluded that consumer discretionary names with pricing power and efficient supply chains are best positioned for the second half of 2025.