May 23, 2023 - Economy

Americans are spending less

Change in consumer spending, by select category
Data: Morning Consult; Chart: Axios Visuals

Is it possible to engineer a soft landing where we all keep our jobs but just spend less, thereby bringing inflation pressures down without triggering a recession? The Fed definitely hopes so — and new spending data from Morning Consult suggests they might be on track.

Why it matters: Retail spending data out last week suggested that the American consumer was barely slowing down. Zoom out, however, and it appears most people are actually spending less than they were a year ago.

By the numbers: The Morning Consult's latest consumer spending report shows significant decreases in the amount Americans spend on most categories.

  • Spending on airfare is down 34% from a year ago, for instance, while spending on hotels is down 31%.

Between the lines: Those categories are services, not goods, and aren't included in the Census Bureau's retail sales report.

  • On top of that, Morning Consult uses a "trimmed means" methodology that ignores the highest spenders, who might be skewing the aggregates.

What they're saying: "It seems like the economy is starting to cool off after persistent and surprising strength," says Morning Consult economist Sofia Baig.

The bottom line: After the YOLO year of 2022, 2023 is feeling a lot more normal and subdued — which is exactly what the Fed wants to hear.

Go deeper