The second quarter has shown continued earnings growth for corporate America, but there are signs that inflation and a slowing economy are starting to weigh on the U.S. consumer. Some corporate executives are highlighting growing weakness among lower income consumers, even while many companies say demand appears strong overall. That weakness is likely to spread if the economy continues to slow, and that suggests a more discerning eye will be required for investors to find winners as consumers search for deals and put off big-ticket purchases. A concerning sign about the consumer came earlier this week from AT & T . CEO John Stankey told CNBC’s ” Squawk Box ” on Thursday that bills are getting paid more slowly, especially with lower income customers. “There’s clearly some dynamics going on in the economy where we have customers that are stretching out their payments a bit,” Stankey said. “We expect that they’re going to continue to pay their bills, but they’re taking longer to do it. That’s not atypical in an economic cycle, and we’re starting to see maybe the bottom end of the subscriber base making some decision between am I paying this bill this month or that month given some of the pressures they’re seeing at home.” One of the first areas where a consumer recession might appear is in the auto market. AutoNation CEO Michael Manley said that the bottom end of the car market is starting to weaken. “From a volume perspective, total used sales were down 4%, and down 9% on a same-store basis. And all of the volume reduction was in our entry selection of vehicles, which are priced at $20,000 and below … Clearly, that is a segment that is under pressure,” Manley said on Thursday. The pressure on consumer spending growth comes as inflation remains near four-decade highs, shaking off the “transitory” label and forcing the Federal Reserve to hike rates aggressively. Many economists fear that the U.S. will fall into a recession as the central bank fights rising prices. The inflation comes after pandemic-era stimulus helped boost household balance sheets in 2020 and 2021, even for many unemployed Americans. CEOs cite that strength as a reason to be optimistic. However, with price increases outpacing wages, those savings won’t be able to support the same level of spending. Robert Gorman, the CEO of Atlantic Bankshares , said in an earnings call on Thursday that the regional bank was seeing an outflow of those surplus deposits “especially on the lower moderate income balanced clients.” Discover Financial CFO John Greene said that there was evidence in the credit card company’s data that high gas prices were altering consumer behavior, even with the labor market still strong. One way that customer behavior changes in a downturn is called substitution. Morgan Stanley researchers said in a note to clients on Friday said the high-frequency spending data showed consumers were trading down to cheaper brands and off-brand products to fight inflation. “Early signs of trade down in high frequency purchases such as tobacco, grocery & fast food signal consumers may be shifting spending patterns & gravitating to value prices. We think this is just the beginning. High inflation likely encourages more trade down thru 2022,” the note said. For investors, Morgan Stanley highlighted several companies with strong pricing power. Those include snack food brands Mondelez and Hostess Brands , as well as elf Beauty. On the other hand, the firm said that food companies in categories with cheaper competitors could be in trouble. Kraft Heinz and JM Smucker could be names to avoid, Morgan Stanley said. Similarly, BMO Capital Markets chief investment strategist Brian Belski said in a note to clients on Friday that “stock selection is crucial” in the consumer discretionary sector. BMO has an outperform rating on TJX Companies , which could benefit from consumers trading down to cheaper apparel. — CNBC’s Michael Bloom contributed to this report.