Amid steady spending and shifting rates, Empower chief investment strategist Marta Norton used a national TV appearance to explain why the consumer still anchors the economy and how investors can spread risk now. Speaking on a weekday market program from New York, she outlined a practical playbook for investors and warned against chasing recent winners without a plan.
The discussion centered on two themes: the strength of household demand and steps to build portfolios that can handle changing conditions. Norton argued that jobs, wages, and cash buffers continue to support spending, even as borrowing costs test budgets. She urged investors to think across asset classes, time horizons, and income needs.
Why the Consumer Still Matters
Household spending drives a large share of U.S. growth. That makes the health of shoppers a key signal for earnings and markets. Norton pointed to steady demand in services and a mixed picture in goods, where price sensitivity is higher.
Norton highlighted the “resilient consumer,” noting that steady employment and selective savings continue to support travel, dining, and entertainment.
At the same time, she noted pressure points. Higher interest costs have lifted monthly payments for many households. Retailers report greater use of discounts. Credit data show some increase in delinquencies, most among lower-income borrowers.
Economists watching the same trends say resilience can fade if the job market weakens or inflation flares again. That is why many strategists watch weekly claims, retail sales, and confidence surveys for early turns. Investors often react before the data become obvious.
Building a Portfolio for Uncertain Markets
Norton urged balance across stocks, bonds, and cash, with tilts guided by goals and time frames. She framed diversification as defense and offense, helping investors manage pullbacks while staying invested for growth.
Her advice was direct: prioritize discipline and “diversify your portfolio.”
She outlined a few practical steps that can help long-term investors avoid reacting to headlines.
- Use core stock funds for broad exposure, then add small tilts in sectors or factors like quality and value.
- Pair equities with high-quality bonds to cushion equity swings and capture income.
- Hold some cash-like assets for near-term needs to avoid selling during dips.
- Rebalance on a schedule to keep risk aligned with the plan.
Within equities, Norton said earnings stability and pricing power matter. Companies with strong balance sheets can manage higher rates better than peers. In fixed income, she favored a mix of duration and credit, so portfolios can benefit if growth slows or if spreads normalize.
Multiple Views on Risk and Return
Some investors argue that mega-cap technology remains the clearest path to growth. Norton acknowledged strong cash flows and secular trends, but she cautioned about concentration risk. A narrow market can inflate volatility if leadership stumbles.
Others prefer a heavier bond tilt, citing higher yields than in recent years. That camp sees more predictable income and potential price gains if rates fall. Norton agreed income looks more attractive, but warned that inflation surprises can still hit bond prices.
For income seekers, she noted that dividends, Treasurys, and investment-grade bonds can work together. For growth-focused savers, stock exposure remains essential, but should be sized to time horizon and comfort with swings.
What to Watch Next
Incoming data on jobs, wages, and inflation will shape rate expectations and retail health. Corporate earnings guidance, especially from travel, housing, and consumer goods, can confirm whether spending holds or cools.
Norton pointed to three signposts that can guide positioning over the next quarter:
- Labor market trends, including hours worked and job openings.
- Earnings breadth across sectors, not just index leaders.
- Credit conditions, from lending standards to delinquency rates.
If data soften, high-quality bonds may help offset equity volatility. If growth holds, diversified equities should benefit from steady earnings. In both cases, the plan matters more than any one print.
The takeaway is clear. The consumer has kept the recovery on track, but the margin for error is thinner. Norton’s message pairs caution with commitment: stay invested, spread risk, and let a rules-based process guide moves.
For readers, the next steps are simple. Review allocations, confirm emergency savings, and set rebalancing dates. Market narratives will change. A disciplined approach can keep portfolios aligned with long-term goals.
