Despite high interest rates and economic challenges, consumer spending remains resilient in the US. This is according to National Retail Federation Chief Economist Jack Kleinhenz. In Q1 2024, the U.S. economy saw a decline in growth but consumers are still spending more compared to a year ago.
According to the NRF’s Monthly Economic Review, GDP grew by 1.6% in Q1, down from 3.4% in Q4 2023. Although inflation has caused a slowdown in economic expansion, indicators like a strong job market and ongoing spending by consumers and businesses are keeping the economy resilient. Despite this, consumer spending growth decreased from 3.3% in Q4 to 1.6% in Q1 but still showed a year-over-year increase of 2.5%.
In March, total retail sales exceeded expectations by 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 .
Despite this, sectors like healthcare, social assistance, transportation, and warehousing showed job gains while non-farm payrolls rose by only 175,000 , falling short of estimates at 240,000 . The unemployment rate increased slightly to 3.9%. However overall despite these challenges ,the US economy continues to remain good shape due to consumer spending and a strong labor market