General Mills’ Earnings Sound Warning on the Economy

General Mills’ latest earnings report is being read as a warning sign for the wider US economy, according to Quartz. The company behind brands like Cheerios and Nature Valley reported a 1% decline in organic net sales for the quarter, while adjusted operating profit in its core North American segment dropped 20%. Rather than pointing to a company-specific problem, the results suggest a broader shift in consumer behavior, as shoppers facing tighter budgets increasingly turn to lower-priced store brands.

The company’s shares rose about 2% in pre-market trading Wednesday, a move that appeared driven more by relief that conditions are not deteriorating faster than expected than by confidence in a near-term rebound.

The trend mirrors what grocery chains such as Kroger have been reporting. Lower- and middle-income shoppers are spending less per visit, cutting out nonessential items, and leaning more heavily on promotions instead of name brands. “High-income premium shoppers continue to spend, while lower-income customers are pulling back more aggressively,” Kroger interim CEO Ronald Sargent said recently.

General Mills posted quarterly net income of $413 million, down sharply from $795.7 million a year earlier. In response, the company has reduced prices on about two-thirds of its North American grocery products, according to the Wall Street Journal. CEO Jeff Harmening noted that discounts are driving higher purchase volumes, reflecting ongoing financial pressure on consumers.

All of this is unfolding against an economic backdrop that has avoided a full recession but remains sluggish. Tariffs are at their highest effective levels since the 1930s, inflation continues to weigh on households, and the Federal Reserve has cautioned that uncertainty around the economic outlook remains elevated.