What companies are saying about economic risks

A number of companies, ranging from big banks to burrito chains, recently have explained in their earnings reports how high inflation and the risk of a recession are affecting their businesses, detailing the stakes for the Fed as it tries to tame inflation while avoiding causing a severe economic downturn.

Walmart, the largest private employer in the United States, on Monday lowered its profit forecast. The retail giant said rising prices were putting pressure on its customers, and it would need to mark down inventory that wasn’t selling.

Consumer giants including Coca-cola, Pepsico and Mcdonald’s this week cited shoppers’ willingness to keep spending despite higher prices. All three, however, noted that they were unsure how much more consumers would be willing to take.

“We are watching closely for signs of changing consumer behavior as the year goes on and as the average cost of the consumer basket continues to go up,” James Quincey, Coca-cola’s CEO, said on a call with analysts this week.

Chipotle Mexican Grill said that it planned to increase its prices further next month, to offset higher dairy, tortilla, packaging and wage costs.

“The low-income consumer definitely has pulled back their purchase frequency,” Brian Niccol, the restaurant chain’s CEO, told analysts on a call when asked whether he saw signs of customers changing their habits in response to higher prices.

Big banks, including JPMorgan Chase and Wells Fargo, were preparing for an economic downturn by setting aside more money to cover potential loan losses. “We are in a bit of an uncertain world,” James Gorman, Morgan Stanley’s CEO, said on a call. “I don’t think this is the time to be overly aggressive.”

Big, cash-rich technology companies also were hit by economic worries. Microsoft reported lower-thanexpected earnings Tuesday, and its CEO, Satya Nadella, said the company was “not immune” from what was happening in the economy.