Latest results and forecasts from retailers indicate that U.S. consumer spending is under stress due to middle-income Americans spending less and struggling with debt, posing challenges for the retail sector during the back-to-school and holiday seasons.
Consumer spending in the US jumped 0.8% in July, the strongest monthly gain since January, driven by purchases of restaurants, live shows, toys, games, and recreational equipment; however, underlying data suggests that this spending may be on borrowed time.
The cost of groceries has significantly increased, with a family now spending over $1,000 a month even after discounts and deals.
Despite claims by the Biden administration and corporate media that inflation is decreasing, the latest consumer price index from the Bureau of Labor Statistics shows that Americans paid 3.7 percent more for basic consumer items in August compared to the previous year.
U.S. retail sales rose more than expected in August due to higher gasoline prices, but underlying spending on goods slowed as Americans faced increased inflation and borrowing costs, while the trend in underlying spending on goods was not as robust as initially thought in July. Despite this, overall consumer spending is expected to remain strong, driven by spending on services.
Most American adults have cut spending this year, with 92% of adults reducing discretionary spending over the past six months, and 76% planning to cut back on non-essential items in the next six months, as consumers at all income levels feel the impact of the US economy.
Americans are paying a lot more for groceries depending on the state they live in, with Hawaii having the highest monthly price tag per person at $556.76, according to new research by Now Patient.
Consumer spending in the US grew at a weaker pace than previously estimated in the second quarter, indicating that Americans have been cutting back on their spending more than expected.
The majority of American consumers are cutting back on both essential and non-essential items in response to inflation, with 92% reducing their spending, particularly on clothing, restaurants and bars, and entertainment outings; however, despite this, household spending in the US has actually increased by 5.5% compared to last year.
Despite concerns about a weakening consumer and dwindling excess savings, American consumers are still spending, with total card spending likely up 4.5% year-over-year over the past three months, according to Bank of America.
Americans continue to spend at a steady pace despite higher prices and rising interest rates, with retail sales in September exceeding expectations and online and restaurant spending seeing significant increases.
Despite inflationary pressures, American consumers continue to spend, with September's sales reaching $704 billion, a 3.8% increase from the previous year, indicating a healthy consumer outlook for the upcoming holiday season.
Americans increased their retail spending in September despite concerns about inflation, high interest rates, and a potential economic recession, with retail sales rising 0.7% from the previous month, according to the Commerce Department.
