February 27, 2024

A shopper carries a bunch of shopping bags.

Securing the bag for the American economy.
Photo: Angus Mordant/Bloomberg via Getty Images (Getty Images)

The economy is still humming!

There’s been a lot of concern that consumer spending, which is the basis for two-thirds of the American economy, might start slowing down in the face of rising interest rates and inflation (especially the rising cost of housing).

But that’s not the case. GDP growth numbers from the Bureau of Economy Analysis came out this morning (Jan. 25) and show that the economy grew 3.3% in the fourth quarter, much faster than the 2% that economists and other observers had been expecting.

And what propelled all that growth? Shopping! Consumer spending was the biggest contributor to GDP growth in the fourth quarter. What were Americans buying? Fun stuff like dining out (up 19.5%). Also not-so-fun stuff like health care (21.8%).

Sure, the savings rate remains dismal at 4%, suggesting that whatever actual-factual wage growth is coming in and not being spent on increasingly overdue credit card bills isn’t being socked away for future economic calamity. But hey, the economy needs that money now, while we’re still fighting fears of a recession.  

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