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In 2023, the U.S. consumer market emerges as a complex narrative of resilience and adaptation.
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In 2023, the U.S. consumer market emerges as a complex narrative of resilience and adaptation, reflecting broader economic health against a backdrop of global inflationary pressures.

A Strong Black Friday

Initial data from Black Friday and Cyber Monday also indicates strong consumer demand. Adobe Analytics estimates that Black Friday sales were up 7.5% year over year to a record $9.8 billion. Meanwhile, Cyber Monday clocked a 9.6% growth rate over last year, totaling $12.4 billion. While this week was a strong week for retailers, especially given the uncertainty going into the shopping season, it represents a deceleration from last year.

In 2022, Black Friday sales grew 12% as consumers were still flush with cash and savings post-pandemic. Meanwhile, total holiday spending is expected to grow 3%-4% over last year, according to the National Retail Federation, a slowdown from the past three years but in line with average sale increases before the pandemic.

Insights from Corporate Leaders

Strong spending trends are supported by insights from corporate leaders. PepsiCo CFO Hugh Johnston and Wells Fargo & Co CEO Charles Scharf report robust growth in convenience store sales and credit and debit card spending, respectively, indicating a bounce-back and an evolving consumer landscape. JPMorgan Chase CFO Jeremy Barnum notes a reversion to pre-pandemic spending patterns, particularly among lower-income groups.

Income Trends and Financial Health

Black Friday spending, consumer savings rates and levels, modest increases in credit card debt, and consumer debt servicing ratios all represent moderation and a return to pre-pandemic levels. Going into the pandemic, the consumer was in a position of strength. After a decade of low-interest rates, steadily rising equity markets, and increasing housing prices, consumers entered the pandemic with strong balance sheets and high levels of net worth. Cash injections into the consumers’ pockets drove saving, followed by spending, to levels that were inevitably unsustainable in the long run. Expectations that the recent rapid rise in interest rates combined with the spending down of pandemic savings would lead to a serious pull-back in consumption have not come to fruition. The consumer has so far weathered inflation, maintained healthy balance sheets, and has continued to show strength.

Personal income saw a modest increase of .02% in October and a 0.3% increase in September, following a 0.4% gain in August. Disposable income, after accounting for inflation and taxes, returned to growth in October, rising .03% after several months of declines. The recent uptick in disposable income combined with moderating inflation shows that consumers are keeping pace with inflation and weathering higher rates.

While the debt service ratio for households has risen since the historic low in the first quarter of 2021, it has only returned to levels seen just before the pandemic. Before the pandemic, household debt service and household balance sheets were quite strong. Again, recent data implies a return to normal, not a bleak picture of the consumer.

The Wealth Effect and Consumer Behavior

The significant increase in household wealth since the pandemic has amplified the “wealth effect.” This phenomenon, where consumers’ spending decisions are influenced by their perceived financial security, has become more pronounced. An analysis found that for every $1 increase in household wealth, consumer spending increased by an impressive 34 cents in 2017, and this amount has been increasing since 2002. The wealth effect suggests that the recent increases in the stock market and rising home values instill a sense of increased financial well-being among consumers. Interestingly, the wealth effect varies between asset types, with stock market gains and rising home values directly encouraging consumer spending and contributing to broader economic growth and job creation. Increased consumer confidence and spending, driven by perceived wealth, is pivotal in driving the economy, particularly among higher-income brackets that have seen the most significant gains in asset values.


As 2023 unfolds, the U.S. consumer navigates a complex and evolving economic environment. The resilience in consumer spending, bolstered by excess savings and robust income growth, is a result of both the consumers’ strong position entering and exiting the pandemic era. Additionally, the amplified wealth effect, driven by rising asset values, has become crucial in sustaining consumer spending. While trends in consumer debt and savings have reversed as built-up savings are being spent down and may continue to trend in this direction into 2024, the consumer is in a solid position to remain healthy and navigate the challenges presented to them in this economy.

Written by: Kristopher Jones, CFA


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