The pattern that emerged from quarterly earnings reports in which people seem willing to spend on big-ticket times, but hesitate when it comes to clothing and other items, is likely to prevail for the rest of the year, according to Citigroup.
Analyst Deborah Weinswig dubbed the phenomena "C.H.E.A.P.," with consumers readily opening wallets for cars, housing, e-commerce, appliances and home projects, but little else.
That is hitting department stores hard, which one after another cut their outlooks for the year over the past two weeks.
Americans may be less likely to lose a job these days, but the job market still isn't hot. Pay hasn't kept up with inflation and people are absorbing tax changes that have trimmed already stagnant compensation.
Families that have put off buying a car are doing that now, and automakers are posting huge sales numbers. Housing prices have soared with so many people taking advantage of historically low rates.
What became clear during the most recent earnings season for most retailers, however, is where people are not spending money.
Wal-Mart Stores, Macy's Inc., Target Corp. and Kohl's Corp. all lowered their full-year outlooks. Even high-end department store operator Nordstrom Inc. cut its profit outlook for the year, citing disappointing sales.
That's not true of all retailers. Lowe's, the home improvement store, topped Wall Street expectations and raised its outlook. Revenue at stores open at least a year climbed 9.6 percent, the biggest jump since 2004.
At rival Home Depot, it was much the same story, with both chains feeling a strong tail wind from the housing boom.
And while Home Depot raised its outlook for the year, retailers are being forced to cut prices to get people through the door.
Weinswig said she expects this dynamic will continue through the second half of the year.
There are exceptions, however, and Weinswig listed Wal-Mart as a company to watch.
The world's largest retailer must still compete with department stores on clothing and household goods, but it can rely on food sales and consumable goods to help it weather the downturn.
Here's a look at how some retailers were faring Monday amid a modest uptick in the broader market:
Macy's Inc.: Shares fell 37 cents to $44.42
Kohl's Corp. Shares fell 30 cents to $50.70
J.C. Penney Corp.: Shares fell 5 cents to $13.45
Nordstrom Inc.: Shares increased 49 cents to $57.77
Target Corp.: Shares increased 12 cents to $64.47
Wal-Mart Stores Inc.: Shares slipped 10 cents to $73.34