Consumer Spending Resilient Despite Slowdown in Economic Expansion and Inflation
Despite the slowdown in economic expansion due to inflation, consumer spending remains resilient, according to National Retail Federation Chief Economist Jack Kleinhenz. The U.S. economy saw a decline in growth in the first quarter of 2024, but consumers are still spending more compared to a year ago.
The NRF’s Monthly Economic Review reported that GDP grew by 1.6% in Q1, down from 3.4% in Q4 2023. However, despite high interest rates and other economic challenges, consumer spending continues to show signs of growth. Consumer spending growth decreased from 3.3% in Q4 but still showed a year-over-year increase of 2.5%.
Total retail sales exceeded expectations in March, rising by 4% year-over-year according to the U.S. Census Bureau. Kleinhenz attributed the strong spending growth 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.
In April, non-farm payrolls rose by only 175,000 instead of the estimated 240,000 jobs adding slightly to the unemployment rate which increased slightly to 3.9%. However sectors like healthcare, social assistance, transportation and warehousing as well as retail showed job gains overall indicating that consumer spending is keeping the economy resilient despite high interest rates and other economic challenges.
Overall, consumer spending is playing a crucial role in keeping the U.S economy resilient despite inflation and other economic challenges such as high interest rates
