May 23, 2023
While Americans are still in spending mode, interest in big-ticket items is fading. Sales growth for things like furniture, electronics, and appliances fell by 6.8% year-over-year in April, the slowest in three years.
Total retail sales growth is now close to stalling, coming in at just 1.6% last month compared to the year before. That is also the lowest since mid-2020.
Consumers are not exactly buckling under the weight of inflation and higher rates. We saw spending on things like food and drink and personal care items remain strong in April, as savings left over from the pandemic and ample jobs underpin their resilience, and that of the economy.
However, when sales of big-ticket items fall at this pace it’s usually an indicator that a recession is around the corner. Consumer sentiment is also at its lowest in six months, according to initial readings of the University of Michigan’s May survey. And some of the biggest retailers have recently reported that customers are spending less.
We don’t expect a sharp economic slowdown, but the retail sales results add to a list of reasons why we think we could experience a mild recession later this year.
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