Ray Washburne on Consumer Spending, Luxury Retail, and Gas Prices

Gasoline and Diesel Trends

• ⛽ Sunoco is experiencing a strong year, with overall gasoline sales flat but diesel sales up 3-4%, indicating growing commerce and goods movement.
• 🚗 While overall gasoline sales are flat, consumers are driving less, with a 25% decrease in driving since President Trump took office, resulting in national average gas prices around $3/gallon.
• 💡 EV adoption and vehicle efficiency are impacting gasoline sales by about 1.5% annually, but this is not a short-term concern for the business.

Luxury Retail Performance

• ✨ Luxury retail centers are seeing significant growth, with double-digit increases (over 12%) this year, demonstrating the resilience of the high-end consumer.
• 🛍️ Malls are experiencing high foot traffic, with events like Christmas tree lightings drawing large crowds, benefiting not only luxury brands but also mid-range tenants (up 5-6%).

Restaurant and Consumer Spending Insights

• 🍽️ While some restaurant stocks have struggled, brands like Chili's are performing well, driven by strong consumer experiences and value offerings.
• 📈 To-go and delivery services have become a major growth driver for restaurants, increasing from 2-3% to 15-20% of sales, particularly appealing to consumers under 35.
• 💳 Despite credit cards being maxed out, consumers are still actively spending, with labor costs remaining flat and hiring not being an issue.

Economic Outlook and Business Environment

• 📊 The consumer is still spending, with mid-range retail showing single-digit growth and positive outlooks from brands like Abercrombie & Fitch.
• 📉 Projections for 2026 anticipate flat sales across gas stations and shopping centers, rather than massive growth.
• 🏛️ Favorable business conditions include stable taxes and reduced regulation under the Trump administration, though midterm elections in November present a potential concern.
• 🏗️ Inflation is being held down, but a significant factor absorbing construction materials is the AI building boom, which is a separate, notable economic driver.