Consumers 'Stepping Back' From Retail Spending as Economy Cools: NRF
Consumer spending “should remain strong,” but its pace “is continuing to slow,” said National Retail Federation Chief Economist Jack Kleinhenz Thursday. The 2.6% rise in gross domestic product (GDP) for Q3 -- after declines of 1.6% in Q1 and 6%…
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in Q2 -- “dispelled the notion that the U.S. economy is in a recession,” Kleinhenz said, but “the economy is cooling and interest-sensitive sectors, in particular, have seen a significant pullback.” For the rest of 2022, GDP is expected to grow “very gradually,” about half of what was recorded in Q3, as consumers are “stepping back” and changing how they allocate their resources, Kleinhenz said. Employment and consumer spending “should remain positive” heading into 2023, though “there will be economic hardships, and some may feel like they’re in a recession,” he said. Spending will continue for those who have jobs and feel secure about their employment. Rising interest rates have made new homes unaffordable for many would-be buyers, while spending on services is continuing to “bounce back” from the COVID-19 pandemic; that's causing a shift away from spending on retail goods, he said. The willingness to spend has been stable, and retail sales for the first 10 months of 2022 grew 7.5%, on track to meet NRF’s forecast of 6%-8% growth over 2021, he said.