Consumers wrap 2024 with more cautious spending
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Shoppers in San Francisco earlier this month. Photo: David Paul Morris/Bloomberg via Getty Images
American shoppers increased spending in December, though at a more cautious pace, the Commerce Department said on Thursday.
Why it matters: The surprising strength of the consumer kept the U.S. economy chugging along in 2024. The question is whether consumers become increasingly hesitant to ramp up spending, a risk for economic growth.
By the numbers: Retail sales increased by 0.4% in December, slowing from the 0.8% jump in November that was slightly higher than previously thought. November sales were boosted by strong shopping in a single category: autos.
- In December, shopping was more broad. Spending last month surged more than 4% at miscellaneous store retailers — a catch-all category that includes florists, stationery stores and more.
- There were other sharp spikes in spending at sporting goods stores and furniture retailers. Spending at gasoline stations rose 1.5%, helped by higher prices (the data is not adjusted for inflation).
- Two categories had a spending drop-off: building material stores (-2%) and eating and drinking establishments (-0.3%).
The big picture: Retail sales grew about 4% in 2024, a downshift from the 5% growth the prior year — suggesting a steady cooling in consumer demand, though lower inflation last year might have weighed on sales growth.
What they're saying: "The U.S. consumer continues to propel the economy forward," Comerica chief economist Bill Adams wrote in a client note on Thursday.
- "Low and moderate income households are still under pressure from recent years' big increases in the cost of living, but more affluent Americans are spending openhandedly and propelled economic growth last year," Adams added.
What to watch: A narrow slice of data that feeds into GDP calculations points to healthy spending on the part of the consumer in the final quarter of 2024.
- Excluding sales of autos, gas and building materials, retail sales rose 0.7% — a sign "consumers spent joyously in the wrap up of the holiday season," Kathy Bostjancic, Nationwide chief economist, wrote in a note.
