Consumers: Optimistic yet Cautious
The second half of 2023 will likely see US consumer spending be on parity (roughly neutral) with the first half of the year, or heading down, due to competing trends in wage growth and inflation. At the same time real retail spending fell in March of 2023, it was also the first time in two years that wage growth exceeded inflation.
The challenge is the lag effect between wage growth leading to consumer optimism, and inflationary causes. Once the impact of seasonal job growth and potential wage growth wanes from summer to fall, it is likely that consumers will pull back on spending. Inflationary impacts, however, are more visible.
What we’re seeing among our retail customers is a cautious if downward trending approach to expectations for the consumer. Net, expect a tough ride for spending in the second half of 2023.
Group CEO, Synergy Logistics