Recession Ahead?

Home Depot, the world’s largest home improvement retailer with over 2,340 locations—182 in Canada, 139 in Mexico, and the rest in the U.S. and its territories—reported $43.2 billion in sales for the second quarter of fiscal year 2024. This represents a 0.6% growth compared to the second quarter of 2023. However, a closer look reveals that the recent $1.3 billion in sales from the acquisition of SRS Distribution, which covers around six weeks of retail activity, is included in this figure. Notably, comparable sales have decreased by 3.3% compared to the same quarter last year, with a 3.6% drop in the U.S. alone. As a result, net earnings have fallen from $4.7 billion last year to $4.6 billion this quarter.

Home Depot’s CEO, Ted Becker, commented, 'The underlying long-term fundamentals supporting home improvement demand are strong, but during the quarter, higher interest rates and greater macroeconomic uncertainty pressured consumer demand more broadly, resulting in weaker spending across home improvement projects.'

In political terms, these numbers suggest that consumer demand for construction materials—from small contractors to everyday homeowners—has declined compared to last year. The drop in Home Depot’s sales reflects current consumer behavior, where spending has shifted toward essentials due to rising prices. This trend is challenging many retailers, as consumers are less motivated to spend. Low consumer demand could signal an approaching recession; the question isn’t so much 'if' but 'when.' Whether it’s Kamala Harris or Donald Trump, the Home Depot figures indicate an ongoing housing industry crisis affecting homeowners and the rental market. This will likely be a key challenge for the next President within their first 100 days: managing a potential recession.