Consumer spending has softened recently

Sources: Bloomberg and Wells Fargo Investment Institute. Monthly data from January 1, 2005 to November 30, 2023. Inflation-adjusted retail sales are adjusted for inflation using Consumer Price Index goods inflation excluding food and energy.

Key Takeaways

  • Consumer spending has proven to be resilient in this cycle. However, a declining savings rate combined with households increasingly reliant on credit suggest to us that this critical economic support will falter in the coming months.
  • Retail sales have grown at a brisk pace since the 2020 recession. However, part of that growth has been attributed to higher prices overall. When adjusted for inflation, retail sales growth has returned to the post-financial-crisis trend.