Heading into what's by far the seasonally biggest quarter for consumer spending, e-commerce, gaming and consumer hardware spending all still look pretty strong. And there are a couple of things besides the holiday season that could add more fuel to the fire.
One is the potential passage of a stimulus bill. Hopes were fading not too long ago that Congress wouldn't get a bill passed before it adjourned ahead of the election, but with the Trump Administration and Congressional Democrats resuming talks in recent days, just maybe a compromise will get hammered out.
To be sure, with House Democrats reportedly prepping a $2.4 trillion stimulus bill and the Trump Administration previously suggesting it could support a $1.5 trillion bill, there are still meaningful differences that need to be overcome. But the current $900 billion divide between what each side is floating is much less than the $2 trillion-plus divide that existed not long ago.
And should a deal on, say, a $1.9 or $2 trillion bill featuring new stimulus checks and extra unemployment insurance benefits be reached, that's quite likely (judging by the impact the first stimulus bill had) to provide a decent boost to consumer goods spending.
The other thing that boosts consumer tech spending is the arrival of colder weather, which is likely to make the current spending shift away from travel and dining, and towards consumer goods, even more pronounced.
Travel activity typically drops as colder weather arrives, and with COVID-19 leading many of those who are dining at restaurants to seek outdoor seating, it's also likely to have an impact on restaurant spending. In addition, the arrival of colder weather is expected to cause a spike in COVID-19 cases, which in turn could make many consumers more reluctant to travel or frequent restaurants and bars, or shop at physical retail stores as opposed to shopping online.
There's a fair amount of evidence that U.S. consumer tech spending has remained elevated in September. Payment card data still points to solid growth in "card not present" transactions, which in large part involve online purchases, and in a talk with Mizuho Securities analysts, Visa's (V) management indicated they're still seeing 30%-plus U.S. e-commerce growth.
Likewise, PayPal (PYPL) CEO Dan Schulman recently suggested his company has seen little or no deceleration in e-commerce spend, including in places that have mostly or fully reopened.
Meanwhile, contract manufacturer/Apple (AAPL) client Jabil (JBL) indicated on Thursday it's seeing strong iPhone-related demand -- both related to the new iPhone SE and upcoming iPhone launches -- and that it also expects recent strength in tablet, headphone and smartwatch demand to continue. And though this appears to be partly due to their own supply issues, Sony (SNE) and Microsoft (MSFT) have both seen pre-orders for their next-gen consoles quickly sell out this month, and Nvidia (NVDA) has seen the same for its high-end RTX 3080 and 3090 GPUs.
There are still undoubtedly some things to be concerned about. If a deal on a new stimulus bill isn't reached before Congress adjourns, consumer confidence and spending could slump, particularly among households that are financially struggling and/or receiving unemployment insurance benefits.
Also, continued COVID-related business pressures -- potentially made more pronounced by colder weather and no new stimulus -- could drive more bankruptcies, layoffs and capital spending cuts within struggling industries. And that in turn would likely have second-order effects on consumer spending.
With all that said, however, it's not hard to imagine a scenario right now in which growth rates within many consumer tech markets further accelerate during the next few months.
