09/25/2024 – 22:26
High-income consumers, who are less sensitive to inflation and interest rates, are driving consumer spending in the United States by saving less and using existing savings to support spending, according to a new report from Fitch Ratings.
“Fitch expects annual consumer spending growth of 2.2% in 2024, the same as annual growth in 2023. A slowdown is expected in 2025 as income growth slows further due to a slowdown in wage and employment growth,” said Olu Sonola, Fitch’s head of U.S. economic research. “If consumers’ willingness to rely on a strong balance sheet to offset the expected income slowdown continues unabated, the upside risk to consumer spending remains.”
Consumer spending rose 2.9% year-on-year in Q2 2024. Real household disposable income growth was 1.1% in July 2024. The notable reduction from around 4.4% in the same period last year was driven by higher tax payments, the report said.
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