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How to Play Offense When the Data Says “Meh”
Noah Zelvis
September 10, 2025
The headlines were a buzzkill. Household incomes went nowhere after inflation and the past year’s job growth just got cut almost in half.
That combo changes how you should position right now. Let’s keep it light, keep it real, and get you a plan.
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Your Paycheck vs Prices: The Tie Goes to Inflation
The Census Bureau says inflation-adjusted median household income in 2024 was about where it sat in 2019.
Translation for your wallet: the raise you felt often got eaten at the register. Higher earners did better, with top households up roughly 4 percent.
Middle and lower tiers saw little to no statistically clear gain.
Women lost ground to men among full-time workers, and Black households’ median income fell while Asian and Hispanic households rose.
Regionally, the West and Northeast nudged higher. The Midwest and South were flat after inflation.
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Income Gap Implications
Flat real income caps impulse spending. When budgets tighten, consumers prune brand names, delay upgrades, and hunt for value. That tends to reward companies with
everyday traffic, strong private labels, and scale-based cost advantages.
It also favors services that are hard to cut, like waste, connectivity, and repairs. Meanwhile, categories that rely on “treat yourself” vibes can feel the pinch.
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The Jobs Scoreboard Got a Big Rewrite
The Bureau of Labor Statistics’ preliminary benchmark showed the U.S. added 911,000 fewer jobs in the 12 months through March than first reported.
That takes the average monthly gain from about 147,000 to a bit over 70,000.
Sectors like leisure and hospitality, retail, professional services, wholesale trade, manufacturing, and information all took hits.
Layoffs are still not surging, but hiring has cooled. And if the starting point was weaker than we thought, the current labor picture is softer than the old charts implied.
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Earnings Keep Going
Earnings beats fueled by cost cuts and efficiency can keep EPS looking shiny for a while.
But if revenue growth slows alongside weaker hiring and flat real incomes, the margin math gets harder as inventory reorders roll in with higher tariff costs.
Expect more talk of “productivity,” “SKU rationalization,” “price pack architecture,” and “mix.” Translation: companies are still working the price lever, but volume is the real tell.
Tariffs Creep Into the Cart
From groceries to hard goods, more firms are signaling sticker creep as tariffed inputs flow through replenished inventories.
Retailers say some vendors have already nudged price lists up.
Food producers flagged higher beef, pork, nuts, coffee, and veggies. Hardware chains face rising landed costs on imported components.
Many companies tried to absorb increases earlier this year. That cushion is thinner now.
Why This Matters to Investors
This is classic margin squeeze risk. Companies with bargaining power and scale can pass through costs or offset them with better sourcing and logistics.
Others face a tough choice between price, volume, and share.
Look for operators with real cost advantages, high renewal or membership revenue, and must-have services.
Fed Watch: Lower Rates Help, But They Are Not a Magic Wand
The labor step-down plus flat real incomes support the case for a September rate cut.
Lower policy rates should ease funding costs and, at the margin, help housing and credit-sensitive cyclicals.
That said, one cut does not erase tariff-driven cost pressure or instantly revive wage gains for the broad middle.
Think of the Fed as lowering the tide a bit. The rocks in the channel are still there.
Investor Playbook: Squeeze-Ready Positioning
Here is how to tilt while the data cools and prices simmer.
Own the checkout line, not the catwalk. Favor retailers with traffic resilience, scale procurement, and strong private label. Promotions will matter more into the holidays, so merchandising discipline is key.
Favor what people cannot skip. Waste, connectivity, repairs, and membership value are earlier in the budget waterfall.
Mind the tariff tape. Industrial names with North American supply chains and proven price pass-through hold up better than assemblers with heavy imported content.
Watch the wage barbell. High-income consumers still look healthier than the middle. Concepts with aspirational members and value-seeking households both work. The mushy middle can struggle.
Quality of EPS > quantity of “adjusted.” If beats rely on buybacks and headcount trims without revenue durability, be picky.
Top Takeaways
Real incomes are flat for most households. The raise you felt often got eaten by prices.
Job growth was overstated. A large downward revision means the labor base was softer than we thought.
Tariff pass-through is growing. Expect more selective price increases as inventories turn.
Cuts likely. A Fed trim should help financial conditions, but do not bank on it to fix consumer fundamentals overnight.
Top Picks
Four ideas aligned to a squeezed consumer, tariff friction, and a likely rate cut. No hype, just reasons.
Costco (NASDAQ: COST) |
Dollar General (NYSE: DG) |
O’Reilly Automotive (NASDAQ: ORLY) |
Waste Management (NYSE: WM) |
That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.
Best Regards,
—Noah Zelvis
Macro Notes