Despite facing challenges such as high interest rates and other economic factors, consumer spending continues to remain resilient. In the National Retail Federation’s Monthly Economic Review, Chief Economist Jack Kleinhenz states that although economic growth slowed in the first quarter of 2024, consumers are still spending more compared to the previous year. Kleinhenz notes that while there has been a decline in the pace of growth and unexpected inflation, the economy remains strong due to a solid job market and continued spending by both consumers and businesses.
The report reveals that GDP rose by 1.6% in Q1, down from 3.4% in Q4 2023, marking the lowest level since Q2 of the previous year. Despite progress in managing inflation since its peak in 2022, high prices are lingering longer than expected. Nevertheless, consumers are still willing to spend on goods and services despite facing ongoing cost pressures. Consumer spending growth decreased from 3.3% in Q4 but remained up by 2.5% on a year-over-year basis in Q1. Additionally, total retail sales surpassed expectations in March, increasing by 4% year over year according to the U.S. Census Bureau.
Kleinhenz highlights that the spending growth indicates a strong overall U.S. economy, driven by a robust labor market with solid job growth and rising wages. In March, the three-month average payroll gain reached 276,000, the fastest pace in a year. However, job openings hit a three-year low in March, signaling a softening labor market and reducing pressure on wage growth
