Discretionary Spending Cutbacks by Americans Signals Anticipated U.S. Economic Slowdown
Higher interest rates and diminishing savings have finally caught up with consumers’ discretionary spending, as signs increase of a long-awaited U.S. economic slowdown as the nation heads into 2024. Government data at the start of the 4th quarter of 2023 revealed a “cutback in discretionary categories like cars, furniture and gym memberships;” and while Black Friday spending declined at a number of the country’s largest retail chains, there was a “record amount of online purchases made using buy-now-pay-later schemes on Cyber Monday,” with some consumers using credit cards and a Home Equity Line of Credit (HELOC) to maintain spending. Retail sales are projected to increase 3% over the next year — the lowest level in almost a decade aside from the pandemic lows according to a survey conducted by the Atlanta Fed in October. Additional signs of an economic slowdown are the slowing of job growth “with continuing weekly jobless claims climbing to a two-year high,” while wages and salaries rose a nominal 0.1% in October, marking the smallest advance this year.