Record levels of consumer demand are shrinking as higher prices add to wage cuts and domestic concerns.
Why this matters: Buyers will stop buying if goods become too expensive – a trend that if large enough can slow economic growth.
- The latest data on retail, holiday shopping and consumer sentiment, released Friday, paints a different picture of what demand looks like and where it is headed from a year ago.
By numbers: 2021 holiday shopping season extended 14.1% from 2020 At a new record high of $886.7 billion, according to the National Retail Federation.
yes but: Sales declined from November to December, the NRF says – a trend supported by data from the Census Bureau, which showed a decline 1.9% In those two months.
big picture: Consumer sentiment has been falling in recent months to its second lowest level in 10 years early part of the month,
- it’s down 12.9% since last year, As more people begin to worry about the impact of higher prices on their personal finances and the government’s ability to bring those prices down.
What are they saying: “Consumer sentiment is generally a forward-looking indicator versus retail sales, [which is] A lagging indicator,” Arun Sundaram, senior equity analyst at CFRA, told Nerdshala.
- He said the two measurements are beginning to come together, which could mean weaker spending and retail sales in the coming months.
what to watch: personal savings.
- The absence of financial padding in the form of increased unemployment benefits and the child tax credit has caused the personal savings rate to hit a new pandemic low of 6.9% by November.