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US consumer spending shows signs of slowing down

Despite facing high interest rates and experiencing minimal wage gains, consumer spending growth is showing signs of slowing down, according to Jack Kleinhenz, Chief Economist of the National Retail Federation (NRF). Kleinhenz stated in the NRF's Monthly Economic Review for June that consumer spending for the remainder of the year hinges on various factors, notably the rate of job creation, inflation trends, and decisions made by the Federal Reserve.


Kleinhenz highlighted some positive aspects, mentioning that the economy is expanding, inflation is stabilising, and overall economic fundamentals remain solid, supported by increased consumer spending. Although the rate of growth in consumer spending has started to decelerate due to sluggish job and wage growth, along with higher interest rates and stricter credit conditions, consumers still demonstrate a willingness to spend.

The latest Monthly Economic Review suggests that gross domestic product (GDP) is anticipated to grow by approximately 2.3% over 2023, with an improved outlook for employment. Employment growth is projected to average 180,000 jobs per month, higher than earlier estimates. Additionally, inflation, as measured by the Personal Consumption Expenditures Price Index, is expected to decline to around 2.2% by year-end, closer to the Federal Reserve's target.


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