The U.S. Federal Reserve has hiked interest rates by 225 basis points so far this year. One indicator that's likely to feature prominently in the Fed's thinking is the strength of the consumer. Bank of America believes unemployment is the "most important" metric.

The U.S. added 528,000 new jobs in July as the unemployment rate fell to a pre-pandemic low of 3.5%. Wage growth also surged higher, as average hourly earnings jumped 0.5% for the month and 5.2% from the same period a year ago. Consumer spending increased more than expected in June.

Wells Fargo warns that consumers are dipping into their savings to keep up their spending. Barclays analyst Terence Malone noted a slowdown in the pace of spending on goods and services in June. He added that consumer sentiment is at a decade-level low, as measured by the University of Michigan.

Goldman Sachs sees "a number of rising risks" in the U.S. consumer. Lower consumer confidence, eroding wealth and inflation could impact consumers' willingness to keep spending. The second-quarter earnings reports of several consumer names have further fueled the debate around the strength of the consumer.

Barclays compiled a list of stocks that it thinks can thrive even as spending eases. The list includes Archer Daniels Midland, McDonald's, Coca-Cola, PepsiCo and Expedia. Some consumer companies such as Walmart and Bath & Body Works have painted a picture of a pressured consumer and lowered their 2022 outlooks.
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