Something is bothering the American shopper

Maybe it’s the contentious presidential race that has consumers so jumpy. Or the specter of higher interest rates later this year. Or gasoline prices jumping some 20 percent over the last two months.

Whatever the reason, anecdotal evidence is building that the American consumer has suddenly pulled back heading into the critical holiday shopping season. Corporate earnings confirm this. Measures of sentiment confirm this. And retail sales data confirm this.

Adding to the mystery is that job gains have been steady and wages rising. But clearly, either the labor market hasn’t improved enough or many Americans view the gains as short-lived.

On Tuesday, the Conference Board’s measure of consumer confidence fell to a reading of 98.6 vs. the 101 that was expected and the 103.5 that was reported in September. Strength continues to be centered on job market and pay raise prospects, while weakness is focused on widening pessimism over future job prospects and dips in buying plans for both homes and appliances.

A batch of consumer-focused earnings reports has also cast a pall. Athletic apparel maker Under Armour (UA) -- which was a Wall Street momentum sweetheart from 2013 to 2015, gaining 350 percent on hopes it would challenge Nike (NKE) -- is being thumped back to 2014 levels after warning analysts on its earnings call Tuesday night that its growth rate will slow.

Whirlpool (WHR) shares dropped more than 13 percent over the last two trading sessions after reporting a 5 percent earnings miss on weak sales and soft demand. 

Apple (AAPL) traded down 2.3 percent on Wednesday after reporting a 9 percent drop in revenues from last year on a 5 percent year-over-year drop in iPhone sales and very weak uptake of its Apple Watch. Earnings of $9 billion showed a whopping 19 percent decline from last year.

Polaris Industries (PII), maker of all-terrain vehicles and other recreational equipment, is down some 5 percent over the last two sessions after narrowing its forward guidance on expectations of a drop in ATV and snowmobile sales. 

And 3M (MMM) has fallen below its 200-day moving average -- a measure of long-term trend strength -- for the first time since February after issuing weak guidance on lower-than-expected sales, particularly in areas like consumer electronics.

Economists at Deutsche Bank believe a slowdown in consumer spending should be reflected in next week’s initial third-quarter GDP report. They believe shoppers’ newfound caution could be a result of an uptick in energy-led inflation pressure -- which will weigh on real incomes unless wage gains accelerate.

And that’s a problem for the broader economy heading into the holiday season: Deutsche Bank’s Joseph LaVorgna noted that “economic activity outside consumer spending is essentially in recession” and thus “recession risk is probably high than many investors may assume.”