New York (CNN) — Americans are cutting back on Disney parks, Big Macs, and Starbucks coffee. But they continue to shop at Walmart.

Walmart’s U.S. sales at stores open for at least a year rose 4.2% last quarter, and operating profit rose 8.5% over the same period. Walmart’s digital sales in the U.S. are booming, up 22%.

The company raised its sales and profit forecast for the year, a sign that it expects its strong growth to continue. Walmart (WMT) shares rose 7% in premarket trading Thursday.

Walmart is America’s largest retailer and an indicator of consumer sentiment. The company reaches a broad consumer base and its business is stable in most economic conditions.

But after years of higher prices and interest rates, and now a weakening job market, shoppers are looking for bargains. Inflation has fallen to its lowest level in three years, but Americans are still paying more than before for food, housing and many other goods.

This puts Walmart in a good position.

While customers used to laugh at $6 iced coffee at Starbucks, $15 Big Macs at McDonald’s, and other items, they now buy groceries, household goods, and other products at Walmart because they feel they are getting a lot for their money.

“We are not seeing weaker consumers overall,” Walmart CEO Doug McMillon said in a conference call with analysts. “Customers of all income levels are looking for value and we have it.”

Grocery accounts for more than half of Walmart’s sales and Walmart benefits from its price advantage – according to analyst comparisons, Walmart’s prices are around 25 percent lower than in conventional supermarkets.

Walmart said overall prices in its stores and at Sam’s Club were down slightly compared to last year. It also temporarily reduced prices on 7,200 select items — called “rollbacks.” Walmart isn’t the only retailer cutting prices. Target, Walgreens and other chains are also cutting prices. These retailers are cutting prices to win back customers.

Walmart said it does not expect deflation, in which both prices and incomes fall. Although consumers want lower prices, deflation can be dangerous for the economy.

While the core of Walmart’s customer base has traditionally been low- and middle-income people, Walmart has recently grown and gained market share with people earning more than $100,000 a year.

Walmart said the company continued to gain market share among high-income households last quarter.

“The only places anyone is shopping right now are Amazon, Walmart and Costco,” said Michael Baker, an analyst at DA Davidson. “Walmart is very focused on value. Value has become more important. Structurally, they are well positioned.”

The company uses its enormous size and profits from higher-margin businesses like advertising to drive down prices. And it has invested billions of dollars in recent years to remodel stores and build a strong online business that can compete with Amazon.

“Today’s Walmart is different,” said CEO McMillon.

Through Thursday, Walmart stock had risen 29% this year, outperforming the S&P 500. Target (TGT) stock has fallen 5% and Home Depot (HD) has risen 3% this year.

Overall, consumer spending, the backbone of the American economy, is still stable. Consumers are just more selective about what they buy and where they shop.

US retail sales rose unexpectedly sharply in July, the Commerce Department said on Thursday, rising a solid 1% compared to the previous month.

Home Depot officials said in a conference call Tuesday that consumers are healthy but are tackling fewer major home improvement projects, leading to sluggish sales of building materials, lumber and construction equipment.

“Higher interest rates and greater macroeconomic uncertainty have put pressure on consumer demand across the board, leading to lower spending on home improvement projects,” Home Depot CEO Ted Decker said in a statement.

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