📉 U.S. Consumer Is Finally Cracking — and GDP Will Feel It
Core retail spending — the single biggest driver of U.S. GDP — fell −0.1% in December, marking the weakest reading in 8 months.
And this wasn’t a one-off miss.
Spending declined across:
• Clothing
• Furniture
• Electronics
• Auto dealers
All during the holiday month, when consumption is usually strongest.
Only a few defensive categories like building materials and sporting goods saw gains — a classic late-cycle signal.
The pressure is most visible at the lower end:
Lower-income households are cutting back the fastest as essentials (rent, food, energy) consume a larger share of income.
At the same time, wage growth slowed to ~0.7% in Q4, the weakest pace since 2021.
This matters because retail sales feed directly into GDP.
When consumption weakens, growth follows.
Bottom line:
• Consumer demand is cooling
• The margin for economic resilience is shrinking
• Markets are still priced for stability that data no longer supports
Macro cracks don’t appear overnight — they spread quietly.
And this one just widened.
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