Tag Archives: consumer spending

Feb 11 2026

Holiday Sales Disappoint


Posted originally on Feb 11, 2026 by Martin Armstrong |  

Recession

The Commerce Department’s advance retail sales report for December revealed that total US retail receipts were essentially unchanged from November, coming in flat after a 0.6 percent increase in November and well below economists’ expectations for a 0.4 percent rise in December. Core retail sales, or the measure that excludes volatile categories like autos, gasoline, building materials, and food services, and which feeds directly into GDP calculations, actually slipped about 0.1 percent in December following a downward revision to November’s core gain to just 0.2 percent from 0.4 percent previously reported. For the full year of 2025, total retail sales still registered a nominal gain of roughly 3.7 percent compared to 2024.

From the outset, the numbers tell a story that echoes the longer, unavoidable economic cycle rather than the distorted confidence many policymakers still cling to. Retail sales are the largest component of household consumption and by far the biggest driver of GDP. So, when retail sales fail to post any real growth in December, at a time when spending should be concentrated and elevated, it reflects more than seasonal adjustments. Core consumption, which excludes the big ticket and volatile segments, is arguably more telling than the headline, and it turned negative at precisely the point in the calendar when it should have remained positive if households were truly confident about their spending capacity.

Even when you look at the annual figures, a 3.7% advance relative to 2024, those gains are heavily influenced by price effects, tariff-driven cost pass-throughs, and earlier quarters’ momentum rather than rising volumes of goods moved off shelves. Nominal increases can mask real consumption stagnation because they do not strip out inflation or show whether households are actually purchasing more items versus paying more for the same baskets. The flat December reading underscores that the consumer’s grip on spending is loosening at the margins. Retail categories traditionally dependent on discretionary income, such as electronics, furniture, and clothing, struggled, while the modest nominal gains in the annual totals often reflect spending in necessity or inflation-catch-up categories.

This pattern has implications that extend beyond a single monthly release. For much of the past year, robust consumer spending masked underlying weaknesses elsewhere in the economy. Households used savings, leaned on credit, and when forced to spend, focused on the essentials. Real incomes lag behind cost increases in essentials like housing, insurance, food, and healthcare. Wages are rising but they are mismatched with the price of living.

It is now increasingly apparent that the robust GDP prints from mid-year, often cited as evidence of economic resilience, were driven by transient factors and delayed data rather than sustainable consumer strength. The late-year softness puts at risk the projections for fourth-quarter GDP growth and may dampen expectations for early 2026 monetary easing if the Federal Reserve interprets slowing demand as disinflationary pressure.

Dec 18 2025

US Retail Spending in October Revised Down


Posted originally on Dec 18, 2025 by Martin Armstrong |  

Roll Cash

October retail sales were flat following a downwardly revised 0.1% rise in September, missing expectations yet again. This is precisely the type of number that gets spun as “resilient” or “temporary softness,” depending on the political agenda. But when you actually break the data apart, the internal contradictions tell us far more than the headline figure ever could.

Consumer spending feeds into GDP, and retail sales excluding food, autos, and gas surged by 0.8%. That is a strong rebound from September’s decline and above expectations. Consumers are spending albeit defensively.

Auto sales dropped sharply, down 1.6%, which should surprise no one. Auto affordability has collapsed under the weight of high interest rates, extended loan terms, and mounting delinquencies. People stop buying big-ticket items that require financing when confidence wanes and inflation persists.

Food services declined, consistent with job losses in the hospitality sector. Building materials and garden equipment also declined as house-related spending cools. Furniture, sporting goods, nonstore retailers, clothing, electronics, and general merchandise rose but we are in the midst of the Q4 holiday shopping rush.

We are transitioning from an inflationary shock phase into a confidence erosion phase. Spending does not collapse all at once. Rather, spending fragments as consumers become more selective. Smaller discretionary spending on items like merchandise seems more manageable than larger purchases that require financing. Policymakers will insist everything is fine because GDP has not collapsed, but we are witnessing a clear loss of momentum.

As we move toward 2026, the models continue to point toward rising volatility, weaker capital formation, and a growing divergence between what governments say and how people actually behave. Retail sales are telling a story of adaptation before contraction.

Dec 12 2025

Americans Charged $1 Billion to Buy Now Pay Later Platforms over Black Friday


Posted originally on Dec 12, 2025 by Martin Armstrong |  

Debt Burden

The private debt crisis, coupled with a consumer-based economy, is a recipe for disaster. Americans followed the age-old thinking of “buy now if it will cost more tomorrow” during Black Friday and Cyber Mondy sales, leading to the strongest year of sales on record. The problem is that a large percentage of buyers opted to “pay later” through Buy Now Pay Later (BNPL) payment plans, which are contributing to nationwide household debt levels.

Over $1 billion in sales over Black Friday/Cyber Monday was charged through BNPL platforms, a 4.2% YoY increase, according to shopping data from Adobe, which predicts total BNPL spending will reach $20.2 billion by the end of the holiday season.

BNPL offers interest-free installment payment options and is listed as a payment option during most online checkouts. BNPL loans grew from 16.8 million in 2019 to 180 million in 2021 for a total of $2 billion. By 2022, popularity grew and nearly a quarter of US consumers reported using BNPL for a charge. Those with subprime credit are more likely to use this option. The younger generations who favor mobile purchases are also far more likely to use this option as they may not have a credit card. Worse, BNPL provides an illusion of stronger purchasing power.

About 41% of BNPL users were unable to make payments on time, up from 34%, and 60% of users hold multiple loans. These purchases are generally not for big ticket items. In fact, the average loan is $142 per transaction. Apparel, clothing, shoes, and accessories account for up to 45% of all BNPL orders, followed by electronics at 30%. There has been a rise in consumers using this method for essentials like grocery—a massive red flag for the economy.

Total US household debt hit a record $18.585 trillion in Q3 2025, up from $18.39 trillion in Q2. The average debt per consumer stands at around $105,000 per the New York Fed’s Household Debt and Credit Reporting. Around 70% of that debt ($13.072 trillion) is tied up in mortgages. Yet, American consumers are taking on more debt than necessary or sustainable and holiday spending using “pay later” options are a negative indication of what’s ahead.