Kiplinger's Retail Outlook: Consumers Are Still Resilient

Sales this year are likely to be mostly stable, even as the economy slows.

Shoppers with shopping cart and bags
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Retail and food service sales mostly held their ground in February, after a large 3.2% January jump. They edged down 0.4% last month, with declines of about 2% in motor vehicles and restaurant sales — a typical pullback after larger surges in January. Excluding these two categories, sales rose 0.5%.

The small change in February comes after January’s surge likely put sales back to their normal level. That January jump also mostly just reversed declines in November and December, getting sales back to a moderate amount above October levels. Sales changes going forward this year are likely to be similarly small unless consumer sentiment changes drastically.

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For now, consumers seem pretty resilient, despite analyst expectations of a slowing economy because of interest rate hikes. Their willingness to spend shows that any recession later in the year is likely to be mild.

We still expect a general slowdown in retail as consumers switch their buying patterns to more services. Purchases of goods soared at the beginning of the pandemic in 2020. While services have picked up since then, the share of goods in household spending is still above its pre-pandemic norm. That suggests a drop in goods buying later this year as the economy slows.

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David Payne
Staff Economist, The Kiplinger Letter
David is both staff economist and reporter for The Kiplinger Letter, overseeing Kiplinger forecasts for the U.S. and world economies. Previously, he was senior principal economist in the Center for Forecasting and Modeling at IHS/GlobalInsight, and an economist in the Chief Economist's Office of the U.S. Department of Commerce. David has co-written weekly reports on economic conditions since 1992, and has forecasted GDP and its components since 1995, beating the Blue Chip Indicators forecasts two-thirds of the time. David is a Certified Business Economist as recognized by the National Association for Business Economics. He has two master's degrees and is ABD in economics from the University of North Carolina at Chapel Hill.