Despite high interest rates and economic challenges, consumer spending continues to show resilience, 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. Despite this, inflation has caused a slowdown in economic expansion, but indicators like a strong job market and ongoing spending by consumers and businesses are keeping the economy resilient.
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 175,000, falling short of estimates at 240,000. The unemployment rate increased slightly to 3.9%. Despite this setback, sectors like healthcare, social assistance, transportation and warehousing as well as retail showed job gains overall the U