The strength of the consumer is a vital part of economic growth in the United States. Over 70% of the U.S. economy, as measured by GDP, is based on personal consumption. Therefore, studying the consumer’s habits—how much we spend, save, and borrow—can help provide a sense of the short-term direction of the economy. So how strong is the U.S. consumer right now? 

Spending – Retail Sales Have Been Strong

Whether buying yourself a new pair of shoes, purchasing a car, or getting groceries, all those activities are factored into retail sales. Retail sales include selling durable and non-durable goods (mainly sold to businesses) and retail items sold to the public. The U.S. Census Bureau releases this metric monthly. 

Analyzing this data can tell you the strength of the consumer; a higher-than-expected reading is typically seen as positive, while a reading below expectations is negative.

Recent data suggests the consumer is strong as spending remains healthy after last year’s slowdown. 

Data from January showed an unexpected increase in spending of +3.0% month-over-month, well above the expected +1.8%. This was the largest increase since March 2021. The biggest increases were seen in sales at department stores (17.5%) and food services and drinking places (7.2%).

At first, this is surprising, considering the headwinds consumers have faced from inflation and rising interest rates. However, the healthy readings are largely attributed to a strong labor market and consistent wage growth. Retail sales were up 6.4% from January 2022. This reading is above the 20-year average of about 4.5%.

Savings – Not Great, but Improving

Strong consumer spending is great for the economy as long as it doesn’t come at the expense of individuals tapping into their savings. One metric to analyze this trend is the personal savings rate, which is calculated as the ratio of personal savings to disposable personal income (DPI). In January, the personal savings rate was 4.7%, the highest since January 2022. However, in June 2022, the rate was 2.7%, the lowest reading since September 2005. 

This steady increase since the summer suggests consumers are starting to build back their savings, despite increased spending. Over the last 20 years, the average savings rate has been about 6.7%.

Borrowing – Mixed Signs

While strong consumer spending is great for the economy, it can also be detrimental if people increase their credit card debt to pay for their goods and services. According to the latest quarterly report from TransUnion, U.S. total credit card debt increased to a new record of $930 billion at the end of 2022. This is an increase of 18.5% from Q4 2021 ($785 billion).

Although total credit card debt has reached a new record, comparing it to previous years may only capture part of the story because credit card debt could increase compared to the past due to inflation, wages, and possibly population growth. For example, comparing the Q4 2022 total credit card balance of $930 billion to the Q4 2019 balance of $846 billion shows an almost 10% increase. 

However, the average debt per borrower is slightly lower in Q4 2022 ($5,805) compared to Q4 2019 ($5,818).

Delinquencies are also important as they indicate how manageable this debt is for borrowers. As of Q4 2022, delinquencies 90+ days past due is 2.3%, comparable to pre-pandemic levels. This suggests that the debt load seems manageable for now.

If you have a 20% credit card interest rate on a balance of $5,805 and pay $100 monthly, it will take you over 17 years to pay off the balance. In addition, you will be paying about $14,925 in interest on top of repaying the principal.

Let’s use this same example, but assume the credit card interest rate was 15%, around the 2019 average. Paying $100 monthly will result in $4,605 in total interest and take over eight years to pay off. This is still significant, but much better than the situation faced today.


In an ideal world, the consumer steadily spends money with zero credit card debt and a healthy savings balance. However, we live in the real world. Given the circumstances, the U.S. consumer is still in relatively good shape. In the short term, people are still spending money, trending toward the longer-term average for savings and keeping a manageable level of credit card debt per borrower.

Austin Stagman, CIMA, is a Portfolio Manager with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at or email David at

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