We’re Not Going To Disney

The U.S. economy has been resilient despite a mix of challenges. But there are some red flags.

Among the latest warning signs, the unemployment rate is on the rise, fast food sales are declining, and there are worries about a potential recession. Now, market observers can add one more thing to the list: Fewer Americans are going to Disney World.

Parks Profit

The Walt Disney Company (DIS) reported its latest quarterly earnings this week, which showed a year-over-year drop in operating income for its theme park division. The entertainment giant blamed the decline on increasingly familiar factors: high costs and waning demand.

Disney is the latest major company to note that cost-conscious consumers are leaving a dent in sales and growth. Competitor Comcast (CMCSA) also saw a downtick in revenue from its Universal Studios theme parks last quarter. Elsewhere, McDonald’s (MCD) and Starbucks (SBUX) echoed similar concerns on their second-quarter calls.

Discretionary Downturn

Consumer spending, which powers some two-thirds of U.S. GDP growth, hasn’t stalled altogether. Quite the opposite. But this slew of warnings in major earnings reports raises questions as to how long it can continue to grow.

Some Americans are cutting back on discretionary purchases like grande lattes and Orlando vacations to make room elsewhere in their budgets, which could dampen some sectors without slowing broader economic growth.

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