Despite high interest rates and other economic challenges, the U.S. economy remains resilient thanks to the strength of consumer spending, according to National Retail Federation Chief Economist Jack Kleinhenz. Although the first quarter of 2024 saw a decline in economic growth compared to the previous quarter, consumers continue to spend more compared to a year ago.
Inflation has caused a slowdown in economic expansion, but indicators like a strong job market and ongoing spending by consumers and businesses are keeping the economy on track. The NRF’s Monthly Economic Review reported that GDP grew by 1.6% in Q1, down from 3.4% in Q4 2023, but still showed signs of improvement from previous years.
Despite ongoing cost pressures, consumer spending growth in Q1 decreased slightly from 3.3% in Q4 but still showed a year-over-year increase of 2.5%. Total retail sales also exceeded expectations in March, rising by 4% year-over-year according to the U.S. Census Bureau. Kleinhenz attributed the strong spending growth to a robust labor market with solid job growth and rising wages.
In March, there was a significant increase in job openings, with the three-month average payroll gain reaching its fastest pace in a year at 276,000. In April, non-farm payrolls rose by only 175,000 instead of the estimated 240,000, causing the unemployment rate to increase slightly to 3.9%. However, sectors like healthcare