Despite further signs of slowing consumer demand, pockets of strength remain in travel, payments and autos. Hilton on Wednesday beat analysts’ estimates for the second quarter and raised its outlook for the full year, saying it remained optimistic about strong travel demand for the rest of the year. On Thursday morning, Southwest Airlines reinforced that view by beating quarterly estimates and predicting its next quarter would top its pre-pandemic performance. Airlines face capacity constraints and skyrocketing costs, but there is a pent-up desire to travel. “Travel demand surged in the second quarter and so far the strong demand trends continue into the third quarter,” CEO Bob Jordan said. Royal Caribbean is also taking advantage of the trend. The cruise line, which exceeded estimates, said: “Booking volumes received in the second quarter for the second half of 2022 remained significantly higher than booking volumes received in the second quarter of 2019 for the second half of 2019. ” Credit card companies also showed no signs of slowing consumer spending. Remember that American Express reported very high spending on travel and entertainment. He and Visa have beaten estimates over the past week. Visa saw its payment volumes jump 12% in the quarter. MasterCard added to the slew of excellent reports this morning, easily beating estimates. And here’s the key line in the statement from CEO Michael Miebach who said, “Rising inflationary pressures have yet to materially affect overall consumer spending.” Automakers See Pricing Power Auto retailers such as CarMax and AutoNation have explained how relatively strong demand is still for cars. That was also Ford’s sentiment on Wednesday. The automaker’s second-quarter net profit rose nearly 19%, thanks to a 50% increase in revenue. Notably, Ford said consumers are willing to pay when it has cars in stock for sale. “We have very strong order banks, significant pent-up demand, and our products are actually selling as quickly as we can produce them,” said chief financial officer John Lawler. “We haven’t seen a downturn in the industry,” he added. CEO Jim Farley also said, “Given the constraints we have, the demand is always greater than what we can supply.” A different story for tools and gadgets But it’s clear that consumers make choices when budgeting their money. Best Buy’s earnings warning on Wednesday offered a prime example of weakening spending. The consumer electronics giant lowered its fiscal outlook for the second quarter, saying it expects same-store sales for fiscal 2022 to fall 11%. In May, Best Buy predicted a decline of between 3% and 6%. “As high inflation continued and consumer sentiment deteriorated, customer demand within the consumer electronics industry weakened further, leading to second-quarter financial results below expectations we shared in May,” said Corie Barry, CEO of Best Buy. Stanley Black & Decker also warned of its second-quarter performance, sending shares down 12% in trading Thursday. CEO Donald Allan said he was seeing a “softening demand environment” with “significantly slower demand in late May and June.” The company expects revenue to decline in the second half, mainly due to slower sales of tools and outdoor products, and it moderated its price expectations. As a result, it significantly cut its full-year EPS outlook to $5-$6 from $9.50 to $10.50. Analysts polled by Refinitiv expected Stanley to earn $9.66. Talk about ugly. Jefferies analyst Jonathan Matuszewski, who covers Best Buy, warned investors should be prepared for more pain as he downgrades the retailer’s stock. “A recession label for the US economy is being debated, but a discretionary asset recession is here,” he added.