The U.S. economy has outperformed early indicators in the first half of 2023 and continues to move in the right direction, according to National Retail Federation (NRF) Chief Economist Jack Kleinhenz. While the rate of growth is expected to slow for the remainder of the year, underlying strength and resiliency are evident, offering optimism for the future.
Kleinhenz said, “The first half of the year is over and the economy is still moving in the right direction. While its rhythm, tone and pattern have slowed, it has not stalled and recently revised data shows underlying strength that seems to be rolling forward.”
“The resiliency of the U.S. consumer will be tested in the coming months as economic headwinds are likely to impair spending,” Kleinhenz said. “Nonetheless, $500 billion in excess savings built up during the pandemic and continued employment growth mean consumers are “the path of least resistance to economic growth and are doing their part to keep the economy moving ahead.”
The July issue of NRF’s Monthly Economic Review highlights revised data from the federal Bureau of Economic Analysis, indicating that first-quarter gross domestic product (GDP) adjusted for inflation grew by 2% year over year, surpassing the initially reported 1.1%. The personal savings rate has been revised upward to 4.3% from 3.4%, and private final sales to domestic purchasers, a key indicator of underlying growth, were revised to 3.2% from 2.9%.
Consumer spending, which constitutes 70% of GDP, experienced robust growth in the first quarter, with an annual rate increase of 4.2%. This was four times the growth rate observed in the fourth quarter of 2022 and marked the fastest growth since mid-2021, despite challenges posed by interest rates and inflation.