worries about inflation and the potential for an economic slowdown have weighed on retailers this year yet jp morgan argues that for many stocks the bad news is already priced in the spdr sp retail exchangetraded fund ticker xrt is off more than 21 this year although retailers in general had a fairly strong fourth quarter and many provided upbeat commentary about the year ahead investors have been skittish for a number of factors inflation is reducing customers’ buying power at a time when people are keener to spend on services—such as dining out and vacations—than on the goods they stocked up on during lockdown still the market may be too down on the group argues j p morgan’s matthew boss he writes that while the headlines are concerning there are reasons to be optimistic that consumer spending won’t slow dramatically not only is unemployment at a nearly twodecade low but wages have been rising if not as quickly as inflation in addition the household debt service ratio is at a 40year low and household savings rates are above average of course the potential for a recession is still a concern for the group but here again boss argues that stocks have sold off too much given that a “recession is more than priced into the sector today” using a 2001 baseline of samestore sales and margins he estimates that if retailers were to perform as they did during that downturn it would equate to earnings per share of 494 for the group about 3 above the 479 in eps that they appear to be currently pricing in based on trailing pricetoearnings ratios overall he estimates that more than 60 of the retailers he covers are already pricing in a recession similar to the one in 2001 that means that the earnings portion of the pricetoearnings ratio still has room to move up even with economic headwinds moreover plenty of companies have structurally improved their businesses since the pandemic—another catalyst for their multiples to expand as for specific companies using his 2001 era model shows that american eagle outfitters aeo and victoria’s secret  co  vsco may have been most oversold along with ross stores rost and bath  body works bbwi by contrast he notes that gap gps and dillard’s dds have the most downside risk to shares in his recession scenario