American households are cutting back on spending, but are doing so from very high levels, a New York Federal Reserve report showed on Tuesday.
The regional Fed bank said the median increase in household spending last month tipped down to 7.7%, from a record high of 9% in August. December’s spending increase was also well above the 5.1% increase seen in December 2021 and was higher than the 2.5% rise booked in December 2019, just before the COVID-19 pandemic struck, according to the New York Fed’s Survey of Consumer Expectations Household Spending Survey.
The report also found that the number of households reporting a large purchase during the last four months was lower as of December relative to August of last year and December 2021. Survey respondents also reported the lowest level of car purchases since August 2020.
Looking forward, the survey found that expected household spending over the next year moved to a 4% rise from August’s expected 4.4% increase. The December reading was the weakest predicted increase seen since April 2021.
The bank noted that those with incomes of more than $100,000 were the ones most inclined to moderate future spending.