Consumer spending displayed resilience throughout 2023, persisting even in the face of increased bank interest rates and inflation. However, the question lingers: will spending habits remain stable or see an upward trajectory in 2024? Despite expectations of a recession, consumers continued to spend, even with higher interest costs.
"Nevertheless, these favorable conditions may not be sustainable," cautioned Kleinhenz in the January edition of NRF's Monthly Economic Review, released on Tuesday.
The topping up of credit cards has led to a surge in cardholders' debt, raising concerns about the potential inability to meet payment obligations
“We are still largely a paycheck-to-paycheck nation,” said Mark Hamrick, senior economic analyst at Bankrate.
Despite a consistent unemployment rate of 3.7%, Bankrate anticipates slower payroll growth. The delicate balance between income and spending rates is a cause for concern.
The Federal Reserve's actions regarding interest rates will play a pivotal role in determining borrowing costs and credit conditions. Expectations point towards three cuts in 2024 from the central bank. The interplay of these factors adds an element of uncertainty to the economic landscape.