Flashing yellow light for consumer
Add Axios as your preferred source to
see more of our stories on Google.

Illustration: Aïda Amer/Axios
One of the final major indicators of the year suggests a mixed narrative about consumer health during the holiday season: Spending is growing, but shoppers might be opening their wallets a bit more cautiously.
Why it matters: Consumer spending helped buoy the resilient economy in 2024, and any apparent slowdowns proved to be head fakes. But there is no guarantee it will continue in the months ahead.
What they're saying: "The headlines will say that retail spending remained resilient in November as consumers stocked up for the holidays," Nationwide senior economist Ben Ayers wrote in a note Tuesday morning.
- "But the underlying details suggest widening price-conscious shopping behavior as more households end 2024 on a cautious note," he added.
By the numbers: Retail sales rose 0.7% in November, a pick-up from the upwardly revised 0.5% increase in October.
- But much of the shopping activity was concentrated in a single category: cars. Spending at auto dealers surged almost 3% in November alone, following a 2% increase the previous month.
That is a "byproduct of dealer incentives offered to prospective buyers to clear excess inventory," Jim Baird, a chief investment officer at Plante Moran Financial Advisors, wrote in a note. (Our colleagues Tuesday morning wrote about the blockbuster deals for electric cars).
- "The go-go days of goods consumption have seemingly passed as consumers have tightened their belts to a degree," Baird added.
The big picture: The other bright spot in the report besides autos was online shopping, where sales grew by almost 2% last month.
- Spending fell across other categories, including grocery stores (-0.2%), department stores (-0.6%) and the catch-all category for various other shops (-3.5%).
- Consumers also pulled back at food and drinking establishments (-0.4%), the lone service sector category in the report.
Yes, but: Consumer spending has still strengthened over the past year. Retail sales, which are not adjusted for inflation, are nearly 4% higher than the same period a year ago.
- The cross-section of categories in the report that feed into GDP calculations still look OK in November, an encouraging sign for fourth-quarter growth: Retail sales excluding building materials, gasoline and autos rose 0.4%.
The bottom line: Consumers are not pulling back on spending in a way that would suggest the economy is in the midst of a downturn — but for those looking for signs of soft patches, this report offers some evidence.
- "From the Fed's perspective, scratching a little below the surface it will view this report as evidence of some moderate softening, consistent with another rate cut, but not evidence of any major weakening," Richard de Chazal, a macro analyst at William Blair, wrote in a note.
