Early third-quarter earnings show a 'resilient' U.S. consumer, with signs of strain

U.S. consumer spending appeared resilient but uneven: September retail sales rose 0.8% after August's 1.3% gain, partly reflecting higher gas-station spending. Coca-Cola raised its full-year comparable EPS growth outlook to at least 11% from 9%-10%, and UPS lifted its 2025 revenue forecast to about $92.6B from $91.2B; Royal Caribbean said third-quarter guests increased 9% to 2.7 million and 2027 bookings were up in the high teens. In contrast, Sherwin-Williams cited muted demand ahead, while Whirlpool missed earnings and revenue expectations, cut its full-year revenue guidance, and reported North American sales down more than 8% year over year.

Analysis

The useful signal is dispersion, not a broad “resilient consumer” call. Retail growth partly reflects gasoline spending, while nominal sales can mask weaker unit demand: that distinction matters for KO, where North American volume was flat, and SHW, where price-led growth coexists with muted underlying markets and cost pressure. Neither supports extrapolating headline sales into accelerating consumer demand.

RCL’s forward bookings are a stronger leading indicator than current-quarter spending, but booking pace is not realized yield: monitor cancellations, ticket pricing, onboard spend, and fuel costs before treating it as durable earnings momentum. The 8% reaction raises the bar for incremental upside. WHR’s North American contraction is consistent with rate-sensitive big-ticket demand remaining weaker than experiences; this divergence may persist if borrowing costs stay high.

UPS’s consumer read-through is less clean: Amazon delivery reductions are a company-specific volume headwind, so holiday demand can be healthy while UPS’s domestic parcel growth disappoints. For the next 1–3 months, watch holiday shipment volumes, RCL booking conversion, and appliance demand. Over 6–18 months, persistent high rates would likely keep durables more exposed than travel, while fuel and labor costs could erode cruise and parcel economics. Broad consumer optimism is not yet confirmed by unit-volume evidence.

Key Decisions for Investors

• Consider a modest relative-value position: long RCL / short WHR, preferably after RCL’s post-earnings surge consolidates rather than chasing it. Thesis: experience demand and forward bookings hold up better than rate-sensitive appliance demand. Reassess on RCL booking conversion/yields and WHR order or volume trends; reduce if RCL bookings weaken or WHR volumes stabilize materially.
• Do not use UPS’s beat as a clean long signal. Track domestic average daily volume and the pace of Amazon delivery reductions into the holiday quarter; persistent weakness versus management’s stated expectations would challenge the earnings outlook even if overall consumer spending remains firm.
• Treat KO’s raised outlook as company-specific until North American unit volumes improve. Watch price/mix versus units and input costs; a return to volume growth would strengthen the case, while continued flat volumes would argue against paying for a broad-based demand acceleration.
• Key macro falsifiers for the relative-demand thesis: a meaningful decline in borrowing costs that revives appliance purchases, or a fuel-cost/geopolitical shock that weakens travel economics and consumer discretionary spending.