This week, the retail sector is in the spotlight as major players—Walmart, Target, Home Depot, and Lowe’s—are set to announce their latest earnings. The financial community and investors are particularly attentive to these reports, as they will shed light on the state of the American consumer amid new economic headwinds: rising inflation, higher interest rates, and fresh tariffs. Understanding these earnings is crucial for anyone tracking the health of both households and the broader U.S. economy.

A Complex Economic Backdrop

Recent months have seen inflation tick upward, with the most recent data showing consumer prices climbing 2.6% in June. New tariffs have further driven up prices for everyday goods. Despite these rising costs, retail sales have remained surprisingly resilient, rebounding by 0.6% in June after a slight dip in May. However, consumers are growing more cautious, carefully managing spending in the face of persistent price pressures and an uncertain economic outlook.

The housing market provides another layer of complexity. Although the median home price reached a record $426,000, home sales dropped to an annual rate of 3.89 million units. High prices and higher mortgage rates are straining affordability, which in turn dampens consumer sentiment and limits discretionary spending.

Spotlight on Retail Giants

For Walmart and Home Depot, these economic crosscurrents have real implications. Walmart, America’s largest retailer, is expected to report its fiscal second-quarter results against the backdrop of these challenges. Analysts anticipate that higher interest rates and a tough housing market may weigh on Walmart’s bottom line. The company will also contend with ongoing competition from both traditional rivals and online giants such as Amazon, which are all vying for their share of the cautious consumer’s dollar.

Home Depot, a staple for home improvement and construction products, is similarly navigating a shifting landscape. Its professional segment—serving contractors and builders—now represents about half its revenue, and analysts expect this area to show steady demand even as residential home sales slow. Home Depot’s upcoming earnings are forecasted to reflect profits of $4.71 per share for the quarter, with annual earnings projected at $15.03 per share. In the previous quarter, Home Depot posted $39.86 billion in sales but slightly missed profit estimates, underlining the unpredictable effects of today’s economy.

Wall Street maintains a positive outlook on Home Depot, with a consensus “Strong Buy” rating among analysts. The average target price of $423.67 per share suggests potential gains, even as the broader real estate market remains subdued.

Target, Lowe’s, and Beyond

Target, which recently reported $23.85 billion in sales and $1.04 billion in net income for its previous quarter, saw its earnings closely scrutinized for signs of shifting consumer behavior. Same-store sales and online revenue are key metrics analysts watch, especially as shoppers pivot between basic necessities and discretionary spending.

Lowe’s, the other major home improvement chain, stands alongside Home Depot with similar challenges and opportunities. Both face pressures in the DIY segment, as fewer consumers are investing in large home projects, yet there remains strength among professional customers whose projects are less tied to the ebb and flow of home sales.

Tariffs and Consumer Resilience

A central theme in this earnings season is the impact of new tariffs on both retailers and consumers. Industry watchers are eager to see how companies are managing rising input costs—whether through price increases, renegotiations with suppliers, or cost-cutting measures. Perhaps more importantly, earnings calls will reveal whether consumers are absorbing these costs or cutting back.

Recent sentiment data adds urgency to these questions: The University of Michigan’s monthly survey showed a 5% drop in consumer confidence, largely attributable to growing worries about inflation and personal financial prospects. With disposable income squeezed, retailers must work harder to maintain margins and avoid passing on every new cost to their customers.

What to Watch For

As Walmart, Target, Home Depot, and Lowe’s report, investors will look beyond headline numbers to management commentary on consumer health, inflation, tariffs, and the competitive landscape. The ability of these companies to adapt—through pricing strategies, inventory management, and digital transformation—will be critical in the months ahead.

In summary, this week’s retail earnings reports are more than just financial updates. They are windows into the economic realities facing millions of Americans and the companies that serve them. Whether the numbers point to resilience or reveal new cracks, they will set the tone for retail and the economy for the rest of 2025.