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It’s time to wager that President Trump makes it more affordable to live in the US.
Or so advises J.P. Morgan strategists.
“A shift in policymaking towards affordability has favored value-oriented themes as the administration positions itself ahead of the November midterm elections,” J.P. Morgan strategist Dubravko Lakos-Bujas said in a note on Friday.
He reiterated a bullish call on low-end consumer sensitive stocks, citing “One Big Beautiful Bill fiscal spending/tax cuts, beginning of year seasonals (e.g. bottom-fishing), lower gasoline prices (i.e. lowest in about five years) and increasing policy attention on affordability (e.g. housing, consumer finance).”
Some of the stocks most heavily tied to this bullish thesis include: SouthWest Airlines (LUV), Dutch Bros. (BROS), Walmart (WMT), Dollar Tree (DLTR), Dollar General (DG), Citigroup (C) and Chime Financial (CHYM).
All of these stocks have out-performed the benchmark S&P 500 in 2026 except for Dutch Bros. and Citigroup, according to Yahoo Finance data. It’s a possible sign that investors are gearing up for earnings upside in the second and third quarters as a result of affordability related catalysts.
The Trump administration has made affordability a top focus to start 2026.
Trump has signed an executive order that directs his administration to work to ban large institutional investors from buying single-family homes. The president doubled down on this effort in a speech at the World Economic Forum in Davos this week. It’s unclear on when this could be written into law.
Meantime, Trump earlier this month said interest rates on credit cards should be limited to 10% for one year from Jan. 20.
The cap has yet to come into effect, and bank CEOs such as J.P. Morgan CEO Jamie Dimon have panned it. Trump has not disclosed how it may be introduced or whether such a move would be legally enforceable.
Other factors likely also ease household financial burdens this year.
For one, the 20% or so decline in oil prices the past year have brought down gas prices. For the first time since 2020, the annual average price of gas is poised to fall below $3 a gallon in 2026, said industry research firm GasBuddy.
Lakos-Bujas said the gas price pullback will be a huge consumer tailwind.
“Using rough estimates, if the US consumes about 300 billion gallons/year of liquid fuels of which about 45% is finished motor gasoline, and gasoline prices were to average about $2.90 for 2026, this should generate US consumer savings of $20-25 billion through the course of the year, all else equal,” Lakos-Bujas explained.
Many households stand to also get a cash injection from tax changes in Trump’s One Big Beautiful Bill.
New tax provisions such as a higher state and local tax (SALT) cap, “no tax on overtime,” “no tax on tips,” and a higher standard deduction for seniors are estimated to boost refunds by 26% or almost $100 billion, according to numbers crunched by Bank of America Global Research. The stimulus equates to approximately 0.4% to 0.5% of gross domestic product or just over $1,000 per household on average.
A strong refund season will benefit middle income households, BofA says.
However, overcoming the country’s affordability challenges won’t happen overnight. That makes an all out bet on the low income consumer a riskier move for investors.
“We are seeing sales growth in our categories in the US and Europe, albeit at a slower pace,” Procter & Gamble CFO Andre Schulten told Yahoo Finance on Thursday (video above).
The maker of Tide detergent and Pampers diapers saw second fiscal quarter sales missed estimates in the grooming, fabric care, and baby categories as consumers traded down to cheaper private label options.
“The consumer is choosing to be a little bit more diligent in terms of using pantry inventory, maybe dosing the product a little bit more carefully, maybe making choices in terms of how frequently they use,” Schulten said. “None of this is untypical. None of this will sustain. So we firmly believe the category over time will return to three to 4% growth.”
Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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