Despite a notable slowdown in hiring and an increase in the unemployment rate, consumer spending remains robust, signaling no immediate retrenchment according to Gregory Daco, chief economist at EY-Parthenon.
While wages are rising at a slower pace, job cuts are minimal. However, lower-income consumers are starting to feel the impact of higher prices and interest rates, leading to rising credit card delinquencies and increased household debt.
Corporate executives are witnessing a shift in consumer behavior towards cautious spending, with customers actively seeking deals and not spending as freely. This change is prompting companies to prepare for a continued decrease in spending.
Americans' savings have decreased significantly, with a noticeable drop in the percentage of income saved post-pandemic. This decline in savings coupled with cautious consumer behavior is raising concerns about the long-term sustainability of current spending levels.
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