Consumer Spending
Quick Answer
The total money spent by households on goods and services, comprising about 70% of US GDP.
Why It Matters
Consumer spending drives the economy. When consumers spend, businesses earn revenue, hire workers, and invest—creating a positive cycle.
Key Insight: Consumer confidence often leads actual spending. When people feel good about the economy, they spend more freely.
Categories: - Durable goods (cars, appliances, furniture) - Non-durable goods (food, clothing, gasoline) - Services (healthcare, entertainment, housing)
Key Indicators
Retail Sales (Monthly) Measures total receipts at retail stores. Core retail sales excludes autos and gasoline for a cleaner reading.
Personal Income and Outlays Monthly report showing income, spending, and the savings rate.
Consumer Confidence/Sentiment Forward-looking surveys that can predict spending changes.
Credit Card Data Real-time indicator of consumer activity.
Trading Consumer Data
Strong Consumer Spending: - Bullish for consumer discretionary stocks - May increase inflation expectations - Supports retail and travel sectors
Weak Consumer Spending: - Bearish for retail stocks - May lead to Fed easing - Favors defensive sectors
Holiday Season: Retail sales during November-December significantly impact full-year earnings for many companies.