Despite high interest rates and other economic challenges, consumer spending remains resilient in the United States, according to National Retail Federation Chief Economist Jack Kleinhenz. Although the U.S. economy experienced a decline in growth during the first quarter of 2024, consumers continue to spend more compared to a year ago.
Kleinhenz noted that while inflation has caused a slowdown in economic expansion, factors such as a strong job market and ongoing spending by consumers and businesses are keeping the economy resilient. In Q1, GDP grew by 1.6%, down from 3.4% in Q4 2023, but still showed a year-over-year increase of 2.5%.
Despite high prices and inflation, which have shown signs of improvement from previous years, consumers continue to spend on goods and services despite ongoing cost pressures. Consumer spending growth in Q1 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 expected 240,000 jobs due to several reasons such as lower than expected hiring for retail positions during Easter weekend holidays and fewer international students enrolling at universities due to COVID restrictions.
Despite this setback, sectors like healthcare, social assistance, transportation and warehousing showed job gains overall; retail sales continued their upward trend from March’s strong performance.
The NRF’s Monthly Economic Review reported that while inflation has caused some slowdowns in economic expansion; indicators like strong labor market