Spending Doesn’t Stop – U.S. Consumers Continue to Persist
With stubbornly high inflation and rising costs of living for Americans, one thing has surprisingly stayed true among U.S. consumers: high spending. Credit card giant American Express has shown just how persistent these shopping habits are from their recent stronger-than-expected earnings report. They depicted how customer spending in the third quarter grew an astonishing 21% year over year. The large jump in spending was said to have been mainly in goods and services as well as traveling, mostly derived from pushback following the easing of pandemic lockdowns.
Bank of America, which also just posted good Q3 performance, stated that their credit card transaction volumes have also increased 10% year over year. Despite the encouraging numbers from these hundred-billion-dollar companies, recent economic data have pointed to another trend. Consumer spending estimates by the Commerce Department remained flat in retail and food services for the month of September, completely missing analysts’ expectations of growth by 0.3%. The statistical news came just after an increase of 0.4% in the month of August, which can show the encroaching effects of the Fed’s rate hikes and the towering fear of a recession in the next year. Nevertheless, investors will be vigilant towards this week’s earnings reports, as several other companies can now shed some more light on how consumer spending has affected their own revenues and profits.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.