Former Assistant Treasury Secretary Monica Crowley discusses the strain inflation is having on the middle and lower class on ‘The Bottom Line.’
Americans pumped the brakes on spending in January after the pivotal holiday season as they continued to confront high interest rates and steeper prices for everyday goods.
Retail sales, a measure of how much consumers spent on a number of everyday goods including cars, food and gasoline, tumbled 0.8% in January, the Commerce Department said Thursday. That is lower than both the 0.1% decline projected by Refinitiv economists and the revised 0.4% increase recorded in December.
It marks the worst month for retail sales since March 2023.
Excluding the more volatile measurements of gasoline and autos, sales fell 0.5% last month.
Shoppers in Atlanta, Georgia, US, on Tuesday, Feb. 14, 2023. (Photographer: Dustin Chambers/Bloomberg via Getty Images / Getty Images)
The January advance is not adjusted for inflation, meaning that consumers may be spending the same but getting less bang for their buck.
A solid job market and big wage increases have helped to buoy consumer spending in recent months, despite high inflation. However, many economists have been predicting that consumers will grow more cautious as student loan payments resume and high interest rates continue to work their way through the economy.
On top of that, more Americans are relying on their credit cards to cover necessities.
Credit card debt surged to a new record at the end of 2023, while delinquencies are also on the rise.
This is a developing story. Please check back for updates.
