The trend: Consumer spending is holding up, although shoppers’ search for value is becoming more evident.
- Total retail sales—excluding autos and gas—were up by 1.82% year over year (YoY) in the first four months of 2024, according to the CNBC/NRF Retail Monitor. However, an earlier Easter led sales in April to fall 0.6% YoY.
- Ecommerce spending fared better: Online sales rose 7% YoY to $331.6 billion in the first four months of 2024, according to Adobe, as consumers spent more on electronics and apparel and bought more groceries online.
- But Adobe’s research also found that shoppers are gravitating toward cheaper products—a trend that companies like Amazon, PepsiCo, and McDonald’s called out in recent earnings.
The big picture: So far, consumer spending is proving more resilient than pundits expected, due in part to the health of the labor market, larger-than-expected pandemic cash cushions, and an undiminished desire to spend on experiences like travel and entertainment. But persistent cost pressures are weighing on consumers’ ability to spend, despite easing inflation and recovering wage growth.
- Expenses like rent and car payments are taking a bigger chunk out of household budgets—to say nothing of grocery costs, which are up nearly 25% compared with prepandemic figures.
- Between 2019 and 2023, rents rose 30.4%, while incomes grew 20.2%, per a Bloomberg analysis. Meanwhile, high interest rates put car and home ownership out of reach for more consumers, denting confidence as well as demand for big-ticket items.
- And households’ pandemic savings finally ran dry in March, according to the Federal Reserve Bank of San Francisco, adding to consumers’ financial concerns.
- That’s driving up use of alternative payment methods like buy now, pay later (BNPL), which accounted for $25.9 billion of online sales in the first four months of 2024—an increase of 11.8% YoY, per Adobe.
