Five interesting things that Hodges Capital research analysts discovered this week...
#1 PUMP SHOCK: Americans have cumulatively spent about $45 billion more on gasoline and diesel during the war with Iran than they did during the same period a year ago, according to an analysis of OPIS pricing data and federal demand figures. If gasoline prices stay near current levels through 2026, JPMorgan estimates Americans will shell out $172 billion more than they did last year. That figure does not include additional diesel costs. The surging expenses are consuming an outsized share of low- and middle-income consumers’ paychecks. According to The Wall Street Journal, U.S. fuel prices remain below their 2022 peaks, and consumers spend a smaller share of their income at the pump than in decades past. Economists also believe this year’s larger tax refunds have helped many Americans weather the early stages of the shock. “But the flow of refunds will taper dramatically in May, leaving consumers far more exposed to the surge in fuel costs,” Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, told clients Thursday.
#2 FED HIKE? Following a week of surprisingly high inflation readings, traders in the fed funds futures market are pricing in an interest rate increase as soon as December, with even higher odds moving into early 2027. According to CNBC, a December hike carries nearly a 51% probability, while the likelihood rises to about 60% by January and better than 71% by March. Former Fed Governor Kevin Warsh takes the helm of the Fed on Friday and has indicated he believes the central bank can lower rates in the current environment. At the last Federal Open Market Committee meeting, three members dissented from the vote to hold benchmark rates steady, objecting to language suggesting the next move would be a cut. Economists participating in the Survey of Professional Forecasters believe second-quarter inflation will top out at 6%, a substantial increase from the previous estimate, according to a release Friday.
#3 PET PARENT: A growing population of SIPPs (single-income pet parents) and DIPPs (double-income pet parents) is prioritizing pets over planning for children. More than 120,000 new pet profiles are added to Life360 each week, with 62% belonging to households without children. The modern pet is no longer housebound. More than 75% of SIPPs’ and DIPPs’ daily routines are shaped by their pets, which now have a pronounced public presence as they accompany their owners nearly everywhere. Nearly half of pet parents bring their pets on vacations, while 30% include them in weddings and 22% in engagement proposals.
#4 WEIGHT LOSS IMPACT: Obesity affects more than 40% of American adults and is a major driver of diabetes, cardiovascular disease, and healthcare costs. According to research from Deutsche Bank, GLP-1s deliver visible personal benefits within months, including weight loss, improved metabolic health, and, for many users, a meaningful shift in daily habits surrounding food and drink. Their impact is tangible, broadly distributed, and already significant enough to reshape demand across the pharmaceutical, food, beverage, and restaurant industries. Use of Ozempic, Mounjaro, and other GLP-1 medications has surged over the past five to six years, reaching approximately 10% of Americans, according to Deutsche Bank’s latest global consumer survey. Convenient oral pill versions are now available as alternatives to injections, and well over 20% of Americans could be taking GLP-1s by 2030. The share of people dining at restaurants reportedly dropped sharply from 55% to 31% after beginning the medication, while visits to fast-food outlets and coffee shops fell from roughly two-thirds to 37%. While more than half of users previously ordered takeout and consumed alcohol regularly, only about one-third continue those habits after starting the medication.
#5 TIGHTENING THEIR BELTS: According to a recent report from NielsenIQ, one-third of convenience-store shoppers say they have cut back on food, drink, and nicotine purchases in the channel. NielsenIQ reported that chocolate and confectionery prices at convenience stores were 67% higher than at other retailers. The price gap was narrower in cookies, which were 34% more expensive. In the chips, crackers, and popcorn categories, prices at convenience stores were roughly double those of other retailers. Convenience-store dollar sales were 0.5% lower in March, while unit sales declined 2.6%. The channel reported sales declines across all major categories, including alcohol, nicotine, and snacks, with growth occurring only in the candy, gum, and mints category.
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