Can Consumer Spending Stay Strong in 2024?

By: Anneken Tappe · January 11, 2024 · Reading Time: 2 minutes

Unstoppable Shoppers

American consumer spending remained strong last year — much to the surprise of many economists who had expected persistent inflation and high interest rates to eventually take a bite out of spending.

The big question for 2024 is whether this can continue. Consumer confidence has long shown that people are weary from rising costs. If spending patterns change, it could be bad news for the U.S. economy, which is in large part driven by consumer spending. And early signs suggest there might be some clouds over the horizon.

Debt Dilemma

One cause for concern comes from household debt, including credit card debt, which is at historically high levels, according to the Federal Reserve Bank of New York. With more Americans carrying month-to-month debt, focus may shift from adding new buys to their balances to paying off previous purchases.

Future Consumers

Against the high inflation backdrop, the U.S. labor market has remained relatively strong. The low unemployment rate and consistent job gains have cushioned the debt strain on consumers. But there are growing worries that something’s gotta give.

The Fed is widely expected to start slashing interest rates this year, after ratcheting them up to combat inflation, which could relieve some pressure from consumers. But before doing so, the central bank is looking for proof in economic data that inflation has come down enough. The next data point will arrive this week in the form of December consumer price inflation.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

TLS 1.2 Encrypted
Equal Housing Lender