Resilient Spending: How Consumers Continue to Thrive in the US Despite Economic Challenges

Despite high interest rates and other economic challenges, consumer spending remains resilient in the US, according to National Retail Federation Chief Economist Jack Kleinhenz. In Q1 2024, GDP grew by 1.6%, a decline from Q4 2023’s 3.4%. However, consumers continue to spend more compared to the previous year, with inflation causing a slowdown in economic expansion.

The NRF’s Monthly Economic Review reported that consumer spending growth decreased from 3.3% in Q4 to 1.9% in Q1 but still showed a year-over-year increase of 2.5%. Despite ongoing cost pressures, consumers are continuing to spend on goods and services. Total retail sales exceeded expectations in March, rising by 4% year-over-year according to the U.S. Census Bureau. The strong spending growth is attributed to a robust labor market with solid job growth and rising wages.

In March, there was a significant increase in job openings, with the three-month average payroll gain reaching its fastest pace in a year at 276,000. Non-farm payrolls rose by 175,000 in April, falling short of estimates at 240,000. The unemployment rate increased slightly to 3.9%, despite this sectors like healthcare, social assistance transportation and warehousing showed job gains overall; the US economy continues to remain in good shape due to consumer spending and a strong labor market.

Despite the slowdown caused by inflation and high interest rates, consumers are showing their resilience when it comes to spending on goods and services despite ongoing cost pressures.