Consumer Behavior

NRF: Economy conditions going in right direction

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July 12, 2023

The latest insight from the National Retail Federation is one of optimism as the retail group reports economic conditions are "still moving in the right direction" despite slower growth predictions.

"The first half of the year is over and the economy is still moving in the right direction," National Retail Federation Chief Economist Jack Kleinhenz said in a press release. "While its rhythm, tone and pattern have slowed, it has not stalled and recently revised data shows underlying strength that seems to be rolling forward."

"The resiliency of the U.S. consumer will be tested in the coming months as economic headwinds are likely to impair spending," Kleinhenz said. Nonetheless, $500 billion in excess savings built up during the pandemic and continued employment growth mean consumers are "the path of least resistance to economic growth and are doing their part to keep the economy moving ahead."

Consumer spending — which makes up 70% of GDP — increased at an annual rate of 4.2% in the first quarter, which was four times the 1% growth in the fourth quarter of 2022 and the fastest growth since mid-2021 despite strong headwinds from interest rates and inflation. The Personal Consumption Expenditures Price Index showed prices were up 3.8% year over year in May. That was down from 4.3% in April and the first time inflation was under 4% since early 2021, according to the release.