Consumer growth is underpinned by rate cuts and retail Mergers & Acquisition (“M&A”), the latter driven by Gildan-Hanesbrands in 2025.

Consumer-friendly sectors have been optimistic of the projected interest rate reductions to occur in 2025, making retail and apparel stocks the favored beneficiaries of the Federal Reserve projections. The decrease in the cost of financing generally enhances consumer spending and the retail market is an area to observe with the change in the monetary policy.

The most powerful headline-grabbing deal in progress is Gildan Activewear offering to buy Hanesbrands in a $5-billion deal that may lead to a $10-billion-plus apparel heavyweight. The good relations of Hanesbrands and the good sources of retailing and low cost of manufacturing of Gildan are going to have strong cost synergy in the value of 150-200 million dollars per year.

The marriage is being watched as an indication of a wider consolidation trend in retail, with companies looking to gain scale as they deal with pressure on margins and volatile chains. The shares of Hanesbrands have already jumped on the news, with the stock of Gildan indicating the optimism regarding the growth of margins.

Retail is forecast to perform well in the short run, as the easing inflation provides a perfect combination with the evidence of regular job market softness, which supports the argument for an increase in interest rates. Nonetheless, there are obstacles and they include appropriation of the Gildan-Hanesbrands fusion and retaining tariff tension.

A strong rally in retail stocks could follow the Fed easing and well-timed M&A, in case the investors are willing to reduce the risks.