There are certain things Americans excel at. Like, football. And baseball. And inventing all manner of new, cheese-stuffed and/or deep-fried foods (y'all saw the Double Down news yesterday, right?)
But if there were an Olympic event in shopping, Americans would bring home gold every single time. When the going gets tough, America gets shopping.
And historically, that's been a good thing. When the pandemic hit, casting us into the sharpest, shortest economic contraction on record, we took out our credit cards and got to work reviving our economy. Through all the ups and downs of the past three years — pandemic lockdowns, job losses, inflation — Americans have reliably kept on spending.
But even we, the masters of the craft, have our limits.
See here: Big retailers say consumer demand is starting to buckle from the strain of inflation, my colleague Nathaniel Meyersohn reports.
Target, Best Buy, Macy's and other chains say shoppers have pulled back on goods like clothing, electronics and home improvement. Many retailers expect sales to drop in 2023 as consumers hit a breaking point.
"Spiraling inflation forced families to put discretionary purchases on hold and focus most of their spending on necessities," Target CEO Brian Cornell said this week.
To be sure, we're still spending, but we're increasingly dipping into savings and taking on debt to do it.
Total US household debt hit a record $16.9 trillion in the fourth quarter. Credit card balances are swelling and delinquencies are on the rise, my colleague Alicia Wallace reported.
BOTTOM LINE
Corporations have used the inflationary environment of the past two years as an opportunity to fatten their profit margins by raising prices on products. And shoppers have stomached it, because, well, what choice did we have?
But the big companies behind consumer goods may have finally found our breaking point. Consumers are increasingly opting for cheaper, private-label or generic brands to lock in whatever discounts we can muster.
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