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Consumer Spending is Up
More mixed signals from the American Consumer. Consumers will tell you they are worried about their finances and the economy. But there is a disconnect between what they say and what they do. The latest evidence comes to you courtesy of the Retail Sales data.
The Data
American consumers continued spending in December but with a gentler touch. Retail sales grew 0.4%, reaching $729.2 billion—a positive sign, though softer than November's 0.8% increase and below the expected 0.6% growth.
Here's the encouraging part:
Retail growth maintained the same 0.4% pace even when we removed volatile auto sales. This outperformed November's 0.2%, suggesting healthy spending across different sectors.
Total retail sales climbed to 3% in 2024, above 2023 levels. The final quarter growth was strong, jumping 3.7% compared to the previous year. This resilience came despite persistent inflation concerns and economic uncertainties.
What's the economic takeaway?
December's numbers confirm that the U.S. economy continues to grow, driven by resilient consumer spending. The only question is how resilient can the U.S. consumer continue to be.
But here's a cautionary note:
This spending surge is fueled by rising household debt and climbing delinquency rates. While concerning, there's a silver lining: These rates still sit well below their 40-year average.
People, Vibes, and Automation
Want to learn more about the disconnect between reality and the “vibes”? Join BE NKY for their 2025 Annual Forum, which will take place on February 6th. BE NKY will discuss people, vibes, and automation, and there will be great panelists, including Kyla Scanlon. Register at the link below.