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Consumer Spending Slows, Putting The Rest Of Year At Risk For Retailers

Consumer Spending Slows, Putting The Rest Of Year At Risk For Retailers

When the National Retail Federation (NRF) puts out a release with the headline “Consumer Spending Is Slowing,” retailers better take notice. This message is a marked change since the trade association has been consistently upbeat about the retail industry despite the financial pressures shoppers are facing.

“There are ongoing economic challenges and questions, and the pace of consumer spending growth is becoming incrementally slower,” chief economist Jack Kleinhenz reported. He continued, “The current framework clearly increases the chance of a slower economy,” in reference to the Federal Reserve’s actions to control inflation.

Just last month, in the July Monthly Economic Review, Kleinhenz’s tone was predictably sanguine. “The year is half over and the economy is still moving in the right direction. While its rhythm, tone and pattern have slowed, it has not stalled, and recently revised data shows underlying strength that seems to be rolling forward.” The NRF did not respond to my request for comment.

Call me skeptical, but the timing of this announcement suggests NRF sees a major shift ahead, or to quote Shakespeare’s Macbeth, “Something wicked this way comes.” And it didn’t end well for him.

Breaking It Down

Reporting that year-over-year spending growth slowed to 1.6% in the second quarter, after rising 4.2% in the first, the NRF also noted that spending on services was the major growth driver, rather than goods bought at retail…

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