RBC’s Calvasina sees cracks in US consumer resilience ahead of earnings

Retail earnings season is about to offer a real-time stress test of the American consumer, and one of Wall Street’s most closely followed equity strategists is flagging warning signs. Lori Calvasina, who leads US equity strategy at RBC Capital Markets, says cracks are forming in consumer resilience, particularly in discretionary spending categories where tariff pressures and weakening sentiment are starting to bite.

The twist: she’s still bullish on US stocks overall. Calvasina sees no meaningful impediments to the “buy America” trade and has set S&P 500 year-end targets between 7,750 and 8,150, a range that implies continued confidence in large-cap earnings power even as the consumer picture gets muddier.

The consumer confidence gap

Calvasina’s analysis draws a line between two versions of the American consumer. On one side, corporate earnings remain robust and large-cap equities continue to outperform global peers. On the other, consumer confidence surveys have been softening, and discretionary spending is showing signs of fatigue.

Calvasina has flagged consumer discretionary stocks as higher-risk cyclicals compared to their more defensive cousins in consumer staples. This distinction matters heading into a week packed with retail earnings reports.

Why she’s still bullish on US equities

Despite flagging these consumer-level concerns, Calvasina’s overall message for US equities is upbeat. Her S&P 500 year-end target range of 7,750 to 8,150 reflects a view that corporate America’s earnings engine remains fundamentally sound, even if certain sectors face headwinds.

Calvasina, who joined RBC Capital Markets in 2017, argues that risks in consumer-facing sectors are sector-specific rather than systemic. In evaluating equity risk and sector allocation, she employs a multi-factor framework that includes a model she refers to as the “four tiers of fear.”

What retail earnings will reveal

This week’s retail earnings reports will serve as something close to a referendum on Calvasina’s thesis. If major retailers report weakening same-store sales, margin compression from tariff-related cost increases, or downward guidance revisions, the “cracks” she’s identified will look more structural. Results are likely to vary based on each company’s exposure to import-heavy supply chains and their customer demographic mix.