U.S. consumer spending downshifted slightly in January

Monthly report on the consumer economic landscape from U.S. Principal Economist Michael Brown and U.S. Assoc. Economist Travis Clark.

February 24, 2020 – Retail sales (excluding auto sales) growth decelerated in January to 4 percent year-over-year (YoY) after surging in December. On average, the growth in retail sales continues to trend higher. The closely-watched control group (which feeds into the calculation of GDP growth) was downwardly revised for December and flat in January, signaling that consumer spending started Q1 on a softer note.

Consumer confidence showed a slight uptick of 3.4 points from December to January. Confidence in both current and future economic conditions increased as trade tensions subsided with the trade agreement between the U.S. and China and a new trade deal passed between the U.S., Canada and Mexico.

After a solid holiday shopping season, consumer spending downshifted a bit in January, even in light of strong job growth and elevated confidence levels. Disposable income growth has begun to decelerate, which is likely translating into more cautious consumers.

— Michael Brown, Principal U.S. Economist at Visa

This year started off with strong job growth while price pressures have emerged over the last few months. Consumer confidence also posted a sizable improvement in January, implying that the economy remains well positioned for consumer spending growth in 2020.

—Travis Clark, U.S. Assoc. Economist at Visa

Other highlights of this report:

  • Disposable income growth has begun to decelerate.
  • January was the third consecutive month of price growth above 2 percent YoY.
  • The U.S. economy added 225,000 jobs in January, thanks in large part to the mild winter.

Download complete report (PDF), including key monthly consumer indicator charts

Consumer Confidence Index (Index, 1985 = 100)

Line chart showing the U.S. Consumer Confidence Index, ranging from 124.3 in January 2018 to 137.9 in October 2018 and 131.6 in January 2020.

Sources: Visa Business and Economic Insights, Conference Board

The orange lines represent the normal range for each measure in the current business cycle, defined as one standard deviation above and below the average change since August 2009.

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