Fitch sees 'marked' spending slowdown in Q4
Fitch Ratings Inc. projected on Wednesday that consumer spending in the United States is likely to observe a "marked" slowdown in the final quarter of fiscal 2023, given the cooler labor market, weaker wage growth, and the effects of the Federal Reserve's tight monetary policy.
According to Fitch, spending remained "relatively" strong during the three quarters, expanding at an annualized rate of 4.3%, 1.7%, and 3% respectively. Nonetheless, the credit rating agency forecasted a potential decline in consumer spending to 1.2% during the fourth quarter, followed by further weakening in the first half of 2024.
"Consumers continue to draw down large savings buffers built through the height of the coronavirus pandemic," Fitch explained, but cautioned that if this trend persists, the support for spending from these excess pandemic-related savings could gradually "diminish" by the end of this year.