ATLANTA (TND) — Home Depot said Tuesday that customers are cutting back on spending due to higher interest rates and economic uncertainty.
The retailer’s sales for the second quarter of this fiscal year fell 3.3 percent compared to the same period last year. Net profit also shrank by $100 million, according to the company.
“During the quarter, higher interest rates and greater macroeconomic uncertainty put pressure on consumer demand overall, resulting in lower spending on home improvement projects,” CEO Ted Decker said during a quarterly earnings call.
The key interest rate, the target interest rate set by the US Federal Reserve, is 5.3 percent. Federal Reserve Chairman Jerome Powell predicted two weeks ago that he could lower the interest rate if inflation continues to fall, but added: “We are not quite at that point yet.”
Home Depot’s operating profit, or profit after deducting operating expenses, also fell by $100 million compared to the previous fiscal year. In April, a Gallup poll showed that economic confidence fell for the first time since October, with 44 percent of Americans saying the economy was in bad shape.
Despite a slight decline in inflation, fewer survey respondents believed the economy was recovering. The Consumer Price Index (CPI), which measures inflation, fell by 0.1 percent since March. Since the beginning of the year, the CPI has fallen from 3.1 percent to 2.9 percent.
According to a separate Gallup poll, 13 percent of Americans say the economy is the most important problem facing the country, ranking behind “the government/bad leadership” and “immigration.”
The Biden administration is praising its efforts to promote economic growth. President Joe Biden said earlier this month that while he and Vice President Kamala Harris believe “prices are still too high,” they will “continue to fight for the future.”
Former President Donald Trump rejected them, telling Elon Musk in an audio conference on Monday that inflation had “killed” Americans.
“This stupid administration allowed this to happen, and it’s a disgrace,” Trump said. “And that’s what people are most concerned about.”
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