Americans have already started to rein in their spending — and expect to pull back some more this year, according to a Federal Reserve Bank of New York survey released Tuesday morning.
Monthly household spending growth, after hitting a series high of 9% in August, fell to 7.7% in December, according to the New York Fed’s latest household spending survey.
However, that’s still well above December 2021 and pre-pandemic levels of 5.1% and 2.5%, respectively, according to the survey, which is released every four months.
Still, the survey showed a slight pullback in large purchases: The number of respondents who bought a vehicle fell to the lowest level since August 2020, when car sales dipped during the pandemic.
The drop in spending activity is expected to continue through this year, the survey showed.
The median expected growth in monthly overall household spending for 2023 measured 4% in December, down from 4.4% in August and the lowest reading since April 2021.
Despite an expected decline in overall spending, the likelihood of buying a big-ticket appliance or electronics product in the next four months increased as compared to August while it declined for furniture, home repairs, vacations, vehicles and homes, according to the survey.
A slightly larger share of survey respondents also noted that if they were to receive an unexpected 10% pay raise, they would put it toward paying down debt.
The latest check-in on spending activity and expectations comes ahead of a key economic report on Wednesday, the Commerce Department’s final look at retail sales for 2022. Economists are expecting December sales to drop 0.8% from the month before, according to Refinitiv consensus estimates. That would be a wider month-on-month decline than the sharp 0.6% drop in November. The retail sales figures are not adjusted for inflation.
