Economists say the US economy’s backbone remains sturdy — for now.
The Commerce Department on Tuesday releases October figures on retail sales, which comprise a sizable chunk of overall spending. Consumer spending is the lifeblood of America’s economy, accounting for about 70% of economic output.
The October retail sales report was originally due in mid-November, but was delayed because of the government shutdown.
However, private data shows the US consumer has remained resilient in recent months: Bank of America estimates that retail sales — excluding volatile categories — grew 0.5% in October, and 0.6% in November.
Americans haven’t cut back on their spending this year, according to government data, despite historically low consumer sentiment and persistently elevated inflation. Economists say that’s largely thanks to unemployment remaining relatively low.
But if the US labor market continues to slow, coupled with broader affordability challenges, it’s unclear for how much longer the mighty US consumer can continue to power the economy.
“Near-full employment has continued to support broad-based consumer demand,” analysts at Moody’s Ratings said in a December 9 report. “But slowing hiring, cooling wage gains, and mounting affordability pressures are eroding households’ consumption growth.”
“A sharper labor market downturn, rapidly rising consumer anxiety, or both together, could weaken momentum in 2026,” they added.