Consumer spending growth will slow in 2024, economist predicts — it’s ‘not necessarily sustainable'
Consumer spending growth will slow in 2024, economist predicts — it’s ‘not necessarily sustainable'


Consumer spending remained remarkably resilient all through 2023, even in the face of extended inflation and excessive interest rates.

But that is unlikely to proceed, in keeping with Jack Kleinhenz, chief economist on the National Retail Federation.

“A yr in the past, many commentators have been skeptical and calling for a recession, however the recession by no means got here. With every passing month, shoppers stored spending regardless of inflation and better borrowing prices.”

“Nonetheless, these tailwinds are usually not necessarily sustainable,” Kleinhenz stated in the January concern of NRF’s Monthly Economic Review, launched Tuesday.

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Recent stories already present indicators of pressure.

In the final yr, credit card debt spiked to a document excessive, surpassing $1.08 trillion, in keeping with the newest quarterly report from the Federal Reserve Bank of New York.

Now, extra cardholders are carrying debt from month to month and fewer are in a position to repay their balances in full.

“We are nonetheless largely a paycheck-to-paycheck nation,” stated Mark Hamrick, senior financial analyst at Bankrate.

We are nonetheless largely a paycheck-to-paycheck nation.

Mark Hamrick

senior financial analyst at Bankrate

So far, shoppers have been sustained by very low unemployment. December’s jobs report closed out 2023 with one other stable hiring achieve whereas the unemployment charge held at 3.7%. Still, economists surveyed by Bankrate count on a lot slower payrolls growth in the months forward with the jobless charge edging above the 4% stage.

“The labor market seems to be set to chill additional this yr, which will influence shopper expectations for employment and wage growth, and, in flip, have an effect on spending choices,” Kleinhenz stated. “Spending is elevated relative to present earnings, and sustaining the current tempo of growth will be more and more tough.”

What the Federal Reserve will do with rates of interest is essential to figuring out borrowing prices and credit score situations going ahead, Kleinhenz added. The central financial institution has already indicated as many as three cuts coming this year. However, even then, bank card APRs aren’t prone to improve much

“Amid all of the optimism about what the Federal Reserve may do that yr, the excessive price of debt is with us for the foreseeable future,” Hamrick stated.



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