Resilient Spending: Despite Economic Challenges, Consumers Continue to Shop Strong

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