Consumer goods spending rebounded on a month-over-month basis in January, increasing 7.6% compared with a 6.8% decline in December 2021 when consumer spending was impacted from concerns of the omicron variant and elevated holiday sales in October and November 2021. This 7.6% increase exceeded the 2.1% increase in total consumer spending in January, according to data from the Bureau of Economic Analysis.
Consumers continue to speak with their wallets and display both the means and desire to spend in the market despite the discontinuation of the child tax credit in January and consumer sentiment readings at the lowest levels in the last 10 years.
The strong consumer spending was across all consumer goods sectors; furnishings and durable home equipment increased 8.6% in the month, while recreational goods and vehicles, and clothing and footwear increased 8.5% and 5.6%, respectively.
As we look forward to the rest of the year, where consumers will spend their money will continue to be a topic of conversation. As consumer mobility increases and COVID-19 caseloads and hospitalization rates continue to decline, some of the additional buying power consumers maintain may shift towards travel and other services. However, if January is any indication, consumers may not be ready to make that transition.