Amazon, Walmart, Dollar General and Dollar Tree all agree on one thing about the US economy. What does it mean for investors?

Everyone probably knows this something is in line with the US economy — it’s a major talking point for the upcoming presidential election. That said, it’s hard to say what exactly is going on. But general dollar (DG -0.57%) CEO Todd Vasos thinks he has a better idea than most.

On Aug. 29, Dollar General reported its financial results for the second quarter of 2024, and Vasos went into finer-than-usual detail to discuss what’s going on beneath the surface. And for low-income Americans, the picture is not pretty.

Dollar General has more than 20,000 locations and positions itself in rural areas where people may not have many shopping options. But these tend to be lower-income areas, meaning a large percentage of its customers — more than 60 percent — make less than $35,000 a year. This income bracket is struggling.

Vasos says 30 percent of his customers have maxed out at least one credit card, and about a quarter think they’ll miss a payment in the next six months. This situation is affecting consumer behavior, and Dollar General isn’t the only company seeing it.

What is happening to the economy?

As many of them struggle to pay bills, Dollar General customers cut back on discretionary purchases and buy only the essentials, like food. Rival The dollar tree (DLTR -2.91%) observed the same trend in Q2 2024. At both the Dollar Tree and Family Dollar chains, sales of consumables increased, while sales of discretionary items decreased.

According to Dollar Tree management: “As we’ve seen for several quarters, demand from Family Dollar’s lower-income core customer remains weak.” This is what Dollar General noticed.

It’s more than just chain dollar stores. Even an e-commerce giant such as Amazon (AMZN 0.91%) notice some related trends. CEO Andy Jassy recently said, “We’re seeing lower average selling prices or ASPs right now as customers continue to trade down on price when they can.”

Management at Walmart (WMT 1.31%) agrees that everyone is looking for value. But it provided an additional perspective worth mentioning. The company’s chief financial officer says: “Upper income households (are) continuing to account for the majority of gains.”

Putting all these insights together, it appears that lower-income consumers are struggling, while people in higher income brackets are doing well. Now, I know that SOUNDS intuitive, but it’s actually a bit unusual. During tough economic times, people often change their behavior regardless of income bracket.

Investors can look at companies such as RH (NYSE: RH) for further insight here. RH sells luxury furniture and offers other services to high-income earners. The company expects to grow revenue by 5% to 7% this year, in a relative show of strength for high-income customers.

In other words, it appears that people with higher incomes continue to carry on as if things were business as usual in the economy. But people with lower incomes are struggling to make ends meet and have changed their spending habits as a result.

What does all this mean for investors?

Everyone wants to know what’s going to happen to the economy so they know exactly how to “play” it. But I’m afraid it’s impossible to tell what will happen next, because the past is no reliable guide to the future.

Investors can certainly find similarities to past economic cycles. But the way things are going is unique for now. Stanford professor Scott Sagan once quipped, “Things that haven’t happened before happen all the time.”

So if you’re looking for a detailed stock market manual for the next year or so, I’m sorry to disappoint you. I don’t have one.

The truth is, investors don’t know what’s coming next. Ironically, investors never do. But there are times — like now — when investors feel less confident than they normally do. When things are going well, people think they know exactly what will happen, even if they don’t. It’s only when things start to go downhill that they feel uneasy.

Still, there it is still, an actionable conclusion. It just might not be the expected food.

Investors should invest in companies for the long term. Trying to make an investment based on where we are in the economic cycle, monetary policy or geopolitics will produce poor returns because these are things we cannot predict. Comments from the management teams at Dollar General and Walmart may be helpful to some extent. But investors still need to think in terms of years, not months.

Famous investor Warren Buffett said, “If you wouldn’t consider owning a stock for ten years, don’t even consider owning it for ten minutes.” That’s the spirit behind it. Investors should buy stocks of top companies that are positioned to thrive in a variety of potential economic environments.

I could probably come up with a long list of stocks I wouldn’t mind owning for the next year or so, based on my assumptions about what’s going to happen next with the economy. That list gets shorter the further I go. But the list I create with a long-term mindset is likely to be of much higher quality because I’d eliminate ideas that need things to go exactly according to my short-term assumptions.

The economy is in an interesting place and we probably didn’t see things exactly as they are now. But developing a long-term investor mindset is still best, no matter what happens next.