People aren't buying cigarettes like a recession is coming

Analysts and investors are starting to get worried about a possible recession.

But Altria Group CEO Marty Barrington doesn’t think we’re looking at a major slowdown in the near future because consumers haven’t stopped buying cigarettes.

“We think that the adult tobacco consumer goes into 2016 with those positive feelings,” said Barrington in the company’s quarterly earnings call Thursday.

“You see speculation in some quarters about recession clouds looming, but we went into the year feeling pretty [good] about the adult tobacco consumer.”

Consumers are the driving force of the US economy, and while macro-level data is more important, strong showings from consumer products such as cigarettes are encouraging.

In fact, the cigarette industry has been having something of a mini renaissance lately. After years of quarterly sales declines around 3% to 5%, sales increased for the first time in nearly a decade in 2015.

By comparison, during the worst parts of the recession quarterly sales were declining by 12.6% year-over year.

Barrington thinks that the macro environment is still very favourable for consumers, citing similar reasons to other economists.

“We go into the year believing as a whole that the adult tobacco consumer continues to feel better going into 2016 as they did in 2015,” said Barrington.

“Obviously unemployment is down, housing starts are up, the effect of gasoline prices. We see improved adult tobacco consumer confidence. Now of course that effect was felt in 2015 and we doubt that we’re going to see the same effect as year-over-year to 2016 but I think it’s good news.”

In short, consumers aren’t ready to slow down on cigarette purchases just yet.

And while it may not be great for their health, it might be good for the US economy.

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