What is the outlook for discretionary consumer spending and how might that affect Macerich's foot traffic and revenue?

Outlook for discretionary consumer spending

U.S. discretionary spending is currently on a modest upswing. Core‑inflation has been trending lower (CPI YoY 2.9% in July), wages are rising modestly, and consumer confidence has ticked up in the latest University of Michigan surveys. However, the recovery remains uneven—high‑income households are returning to premium brands, while price‑sensitive shoppers are still cautious and gravitate toward value‑oriented retailers and e‑commerce. The net effect is a moderate‑to‑slightly positive outlook for discretionary spend over the next 6‑12 months, with growth rates in the 2‑3 % range YoY, driven largely by travel‑related spending (restaurants, entertainment) and “experience” retail (fashion, tech accessories). Any further easing of credit conditions or a stronger labor market would add upside; a resurgence of inflation or a sharp increase in mortgage rates could pull back discretionary dollars.

Implications for Macerich foot traffic and revenue

Macerich’s portfolio is heavily weighted toward upscale, experience‑focused centers (e.g., Santa Monica, Beverly Hills, The Grove). The current discretionary environment supports stable to modestly rising foot traffic—especially in the “high‑end leisure” segment that has shown resilience to economic headwinds. However, two risk factors are worth monitoring: (1) e‑commerce competition that continues to siphon a portion of the “shopping” component of foot traffic, and (2) inflation‑sensitive leisure spend (e.g., dining, cinema) that can be throttled if consumer confidence falters. The Q2 earnings release (no detail provided) likely reflects a modest lift in net sales per square foot (NPSF) but a modest‑to‑flat YoY change in total visitors. If discretionary spending sustains its modest growth trajectory, Macerich should see mid‑single‑digit revenue growth and modest improvement in foot‑traffic metrics; any slowdown would compress NPSF and pressure same‑store sales.

Trading implications

- Technical view: MAC shares have been trading in a narrow $9‑$11 range since Q1‑2025, with the 50‑day moving average around $9.75 acting as support. RSI is near 45, leaving room for upside on a positive earnings surprise or macro‑friendly data (e.g., consumer confidence > 115). A break above $10.20 with volume could signal a short‑term rally toward the 200‑day average ($10.40).

- Fundamental bias: Given the moderate discretionary outlook, maintain a cautious long‑bias. Target price around $11.5 (≈10% upside from current levels) if Q3‑2025 NPSF beats expectations and foot‑traffic guidance remains positive.

- Risk management: Set a stop‑loss near $8.90 (below 50‑day low) to protect against a consumer‑spending shock or a sudden credit‑cost increase that could depress discretionary traffic.

Overall, a stable‑to‑slightly‑improving discretionary spending outlook supports a neutral‑to‑slightly‑bullish stance on MAC, with upside potential if foot‑traffic and revenue trends beat market expectations.