May 21, 2024

Partly Cloudy Consumer Spending Picture Emerges in April

April consumer spending sees slight declines, but a rosy outlook emerges for certain categories

By Jonathan Silver, CEO of Affinity Solutions

While March saw consumer spending bloom, consumers pruned spending in April as confidence plunged to July 2022 lows.

According to the April 2024 CNBC/NRF Retail Monitor, powered by Affinity Solutions, total retail spending decreased by 0.6% and core retail spending (excludes gas, auto and building materials) decreased by 0.05% unadjusted year-over-year (YoY).

The April spending dip may be tied to a calendar anomaly, not a spending slump, though. Easter fell in March this year (compared to April 2023), and April had two fewer weekend days, likely causing spending to shift.

If we look at these numbers seasonally adjusted, total retail spending was up 3.37% YoY, and core retail saw 3.09% growth YoY, painting a picture of healthy consumer spending. Month over month numbers seasonally adjusted showed a modest monthly uptick (0.26% total retail, 0.4% core retail).

There were other positive signs that emerged in April, in particular among lower-income shoppers (earning $50,000 or less). In April, we saw 3.42% YoY growth for total retail and 3.29% core retail, seasonally adjusted, from those low-income consumers. This group makes up half of the total consumer economy, so a healthy economy is really only possible when it contributes meaningfully to YoY growth.

We’re also seeing strong growth in spending among high-income earners (earning $100,000 or more). With 5.05% YoY growth for total retail and 4.58% YoY growth for core retail, seasonally adjusted, this demographic is stronger than the averages.

Going down to the category level:

Home Projects Spring Into Action

Durable goods, which include Furniture, Electronics, Appliances, and Building Supplies, showed the most significant month-over-month (MoM) increase across categories, suggesting consumers are returning to home projects after months of declines.

This growth was led by building and garden supplies, which grew 4.41% YoY and 4.39% MoM after five months of decline. Gardeners returned to their yards after the winter months and sought deals to prepare their flowers and lawns for the coming months. For instance, Lowe’s SpringFest saw big discounts on mulch, Miracle-Gro soil, and outdoor tools. Meanwhile, Home Depot had its Spring Black Friday event with similar sales. With more than half of Americans now maintaining some form of garden, we anticipate sales to remain strong through the remaining spring and summer months.

May the Sales Be With You: Online Shopping Heats Up

Non-store retail outlets, including giants like Amazon, continue to outpace all other categories of consumer spending, with 13.88% YoY growth and 1.18% MoM growth. The exceptional continued growth in this category highlights consumers’ ongoing preference for convenience, flexibility and easy returns.

Consumers are also drawn to the numerous sales offered by non-store retailers, especially Amazon. In the month of May alone, the e-commerce giant hosted Pet Day May 7-8, their Summer Beauty Haul sale May 13-19, and a Book Sale May 15-20. If their Big Spring Sale performance in March was any indicator, this category will see another strong performance next month.

Cleaning Out My Closet

A new season calls for a new wardrobe, with consumers updating their closets to prepare for the warmer months. April is an especially good time for spring clothing sales, with consumers shopping for spring break and preparing for the summer travel season. Thanks to those tailwinds, the clothing category showed an increase of 2.08% YoY increase and 0.46% growth MoM, following consistent growth in the prior 12 months.

Like the boost we say from January’s New Year resolutions, April tends to see a lot of athletic shoe sales amid renewed consumer interest in going outdoors. Capitalizing on that interest, Nike held its April clearance sale this year, promoting up to 50% off popular running shoes and white sneakers.

April Retail Sales Show Consumer Prioritization

April’s retail picture was a mixed bag. Consumers chose to invest their dollars in very specific areas. Specific categories like home improvement and online shopping thrived. Even the clothing sector displayed consistent growth, fueled by seasonal trends.

Seasonally adjusted data showed strong growth among low and high-income earners, while spend from middle-income earners was modest, suggesting they were the most impacted by high interest rates and inflation.

Overall, April performance continues to demonstrate the resilience of the US consumer.

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