Economists say the U.S. economy still stands strong, but consumer stocks are telling a different story. In fact, a conspicuous number of Wall Street’s biggest losers in 2023 are in the consumer sector.

That could mean there is some change in store for the average U.S. consumer and the credit industry in the near future.

It’s also a hint that either one or the other, economic growth or consumer price inflation, will have to give soon.

The economy seems to be running strong based on various data points, including GDP and consumer spending. Store and factory sales have continued to pick up in the second half of 2022 and throughout 2023, according to BEA data.

Meanwhile, Census Bureau numbers show retail and food sales up 3.8% over this time last year. Shouldn’t consumer stocks be rallying if sales are growing?

The fact that the consumer sector is flailing on Wall Street suggests something’s up with the U.S. economy.

What does Wall Street know about consumer stocks?

In October, over two dozen consumer stocks in the S&P 500 set new 52-week lows, according to a recent report in The Wall Street Journal. That is certainly a sector trend.

Moreover, consumer staples, as well as consumer discretionary stocks, are deep in the bargain bin. That’s a worrying sign that persisting inflation across the board is stressing U.S. consumers.

An exec at Conagra Brands (CAG)—the maker of Slim Jim and Vlasic Pickles—even recently hinted on an earnings call that Americans are eating less of certain foods to spare their household budgets the damage.

Conagra’s stock is down 25% from six months ago.

Meanwhile, Target (T) stock is down 30% since April. Over the same period, Dollar General (DG) shares are down by 46%, Campbell Soup (CPB) fell 28%, and Hormel (HRL) is down some 19%.

In the past 30 days, Proctor and Gamble (PG) joined the consumer-stock selloff and dropped 5%, while Colgate-Palmolive (CL) fell 2.4% over the last month.

Retailers brace themselves for a "pause" in spending

Ex-Walmart CEO Bill Simon thinks consumers are so squeezed that they have no choice but to pause.

“That sort of pileup [higher interest rates and rising prices] wears on the consumer and makes them wary. For the first time in a long time, there’s a reason for the consumer to pause,” Simon told CNBC.

Simon’s professional expertise on the state of American consumers isn’t the only indicator that high borrowing rates and consumer price inflation may grind the economy’s growth to a halt.

The University of Michigan’s Consumer Sentiment Index fell to 63% in October. The bellwether of consumer sentiment was 68% in September. The Conference Board’s Consumer Confidence Index fell to 103 in October, its lowest level since April.

FWDBONDS chief economist Christopher Rupkey said: “Inflation is slowing, but prices are still higher than they were before the pandemic and this is taking a toll on consumer confidence."

The 12-month inflation rate in September came in at 3.7%, above most economists’ expectations and still stubbornly higher than the Fed’s target of 2% yearly inflation.