Americans doing less DIY is a worrying sign for the economy

Ellison spoke Tuesday on the company’s quarterly earnings call, during which Lowe’s lowered its earnings expectations for the rest of the year due to continued slowdown in sales for large discretionary projects.

Large projects account for about three-quarters of DIY sales for Lowes, Ellison said, “so any pullback in these big-ticket discretionary categories really has a more disproportionate impact on us.”

Both Lowe’s and Home Depot cited high interest rates leading to lower home sales and refinancing activity, both traditional drivers of expensive home improvement projects.

Harvard’s Joint Center for Housing Studies projects that annual remodeling spending will continue to decline this year to about $450 billion before rebounding to $466 billion in 2025 as homeowners make upgrade “at a more constant and sustainable pace”.

With employment levels looking strong, the stock market performing and home values ​​at record highs, many homeowners are in remarkably good financial shape.

Some even splash out on travel and entertainment, but most can’t afford to pay big bucks for a new kitchen or bathroom right now when borrowing costs are high.

Of course, this is by design – the Federal Reserve raised rates in an effort to slow the economy and control inflation, which it did.

But as more companies report shaky earnings, it’s clear the clock is running out for policymakers to loosen things up a bit and not allow pent-up demand to lie dormant. Plus, it takes time for these things to work their way through the system.

“We think the near-term setup remains complicated,” Truist analyst Scot Ciccarelli wrote in an earnings note. “The negatives (falling fundamentals) will likely be offset by the positives (probable interest rate cuts), but we remain aggressive buyers for medium/long-term investors.”

Lowe’s, meanwhile, is betting on a rosy future, even if it involves a period of difficulty before getting there.

“We’re working aggressively in this recession,” Ellison said. “Whenever a macro inflection comes along, we just want to be ready to take advantage of it.”