Consumer Behavior

Inflation, interest rate spikes not slowing shopping

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October 3, 2022

While consumers are still worried about inflation and interest rate hikes they haven't stopped shopping and spending, according to the National Retail Federation.
Yet the consumer spend rate of growth is slowing.

"The economic situation in the United States is unsettling," National Retail Federation Chief Economist Jack Kleinhenz said in a press release Monday. "Consumer confidence is down, consumer spending's rate of growth has slowed, and economists and consumers alike are worried about the possibility of a recession, all reflecting persistently high inflation and rising interest rates. Nonetheless, spending continues to grow, and many economists say a recession — if there is one — will likely be mild."

"Consumers have become cautious — but they have not stopped spending," Kleinhenz said. "Growth is not as high as last year, but households continue to spend each month as more jobs, wage growth and savings backstop their finances and help them confront higher prices."

Kleinhenz's statements were made in the October issue of NRF's Monthly Economic Review, which stated consumer spending held up better than expected in August as overall retail sales reported by the Census Bureau grew 0.3% from July and 9.1% year over year. Year-over-year increases in retail sales have been mostly in the upper single digits since spring, not as dramatic as the double-digit numbers seen most of last year into early 2022 but still healthy.