Consumer Spending is Losing Steam, and That’s a Bad Sign for the Overall Economy 

The U.S. consumer is one of the most important economic forces in the country, accounting for nearly 68% of GDP as of 2024, according to the U.S. Bureau of Economic Analysis.

For that reason, struggling consumers are a warning to the rest of the economy.  

When everyday Americans can’t shop and spend like they usually do, the ripple effects can be profound. 

The bad news is that, right now, key drivers of U.S. consumer spending are weakening simultaneously, indicating a significant reduction in household demand. Real disposable incomes are effectively flat for the year, the savings rate is currently at a 16-month low, and an increasing number of Americans are using their credit cards to maintain their standard of living. 

We’re already seeing this play out more broadly: Real spending dropped in April, with less being spent on vehicles, dining out, and leisure activities. And the job market slowdown is leading consumers to opt for less expensive brands.  

It’s another barometer of volatility that we like to keep an eye on. Consumer spending was down in April, leading to revised GDP estimates for Q1 that are now indicating a slowdown from 2023’s better-than-expected economic performance. All driven by a weak U.S. consumer. 

#EyeOnVolatility

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