The economy grew at a surprisingly strong rate in the third quarter, according to the U.S. Bureau of Economic Analysis. The Gross Domestic Product rose at an annual rate of 4.9% in the period, the highest rate of growth in two years.
The result perhaps should not have been surprising, given the strength of restaurant sales and of retail sales in general. Low unemployment and two years of wage growth tend to do those sorts of things.
But that doesn’t mean all is well with the U.S. consumer. Indeed, surveys suggest that consumers are increasingly stressed out about high prices and are having a tough time paying their bills.
According to recent U.S. Census data, a growing percentage of consumers said that they had a difficult time paying their bills over the past week.
Overall, the percentage of consumers who said that it was at least “a little” more difficult to pay their bills increased in the week of Sept. 20 through Oct. 2 from a month earlier, to 63% from 59%.
We looked at the data based on education, to determine whether people with student loans are having more problems. But generally, the challenges appear to be agnostic of education level, as the percentage of consumers who say they’re having bill trouble has grown across the education spectrum.
Unsurprisingly, price increases are a key factor. Some 94% of consumers say they’re stressed out by price increases, according to the U.S. Census data.
And that stress is likewise agnostic based on education level and only moderately agnostic based on income.
To be sure, poor people are more likely to be stressed out by price hikes. According to the survey, 98% of people who make less than $25,000 per year are at least a little stressed by price increases. By the time you get to consumers making $150,000 to $$200,000, it’s still 91%. Even 85% of consumers making $200,000 and above say they’re stressed out by prices.
Overall, 94% of consumers say they’re at least a little stressed out by price increases.
Exactly how consumers will react to this in the coming months remains a big mystery. At the moment, there seems to be some reaction, but it doesn’t appear to be hitting restaurants with any real vigor.
Indeed, surveys and executive comments themselves appear to differ. For instance, the CEO of Best Buy complained about “funflation” when explaining weak sales of computers and televisions, arguing that higher costs for concerts and restaurants meant consumers had less money for electronic goods.
And yet, other surveys continually say that consumers with tight checkbooks will cut back on spending at restaurants. A survey last month by New York Life found that 29% of consumers facing student loan repayments would cut back on the aforementioned “fun,” more than any other suggestion.
One may wonder how an economy can grow by nearly 5% at a time when consumers are stressed and unable to pay their bills and are actively talking about cutting back on various spending. But contradiction in economic and consumer data has been the hallmark of 2023. So, it seems that things are still going relatively well. But they probably won’t go well for long. We just have to wait and see when that happens.