Home Depot customers are putting their big home-improvement projects on hold as worries about the economy and interest rates have them sticking to smaller projects.
While people may be painting again and working on their yards, they aren’t pulling the trigger on larger improvements, said Home Depot CEO Ted Decker during Tuesday’s earnings call.
These bigger home-improvement projects are usually financed through loans, while smaller projects can be completed with cash payments, which plays into consumers’ hesitancy, said Home Depot chief financial officer Richard McPhail.
Consumers aren’t canceling that debt-financed kitchen remodel or bathroom upgrade, but they “are still deferring larger projects as a result of general uncertainty and higher borrowing costs in the form of interest rates,” McPhail told the Wall Street Journal.
Interest rates have remained stubbornly high in the aftermath of the Fed’s battle with inflation. The Fed has maintained interest rates between 4.25% and 4.5% since late 2024, although some are looking to Fed Chairman Jerome Powell’s comments at the upcoming Jackson Hole Economic Policy Symposium for signs of an impending cut. Meanwhile, economists have increasingly warned about the threat of stagflation, a combination of low growth and high inflation, as the year-over-year inflation rate increase stood at about 2.7% in July and threats to employment grew.
