'The consumer slowdown has begun': America's deteriorating shopping spree in 4 charts

• American shoppers probably can't keep their big 2023 shopping spree going.
• According to Deloitte, the consumer spending slowdown is already starting.

Americans spent big in 2023 and helped prop up the economy, but consumers' long-running shopping spree may be about to end, according to Deloitte.

Wall Street has been cheering the strength of the American consumer over the past year, with spending remaining robust despite high inflation and tighter financial conditions throughout the economy. Strong spending was responsible for buoying economic growth, with GDP growing at a breakneck pace of 4.9% over the third quarter, according to the Bureau of Economic Analysis.

But there are signs that consumer strength is deteriorating, and the great American spending spree could be grinding to a halt, according to Deloitte chief economist Ira Kalish.

"The consumer slowdown has begun," Kalish said in a note on Monday. "The stellar US economic growth recorded in the third quarter was largely due to the strong growth in consumer spending. However, it is widely expected that consumer spending will decelerate in the holiday season, thereby putting financial stress on retailers and their suppliers."

A consumer slowdown doesn't necessarily mean the economy is about to slip into a recession, but it could push the economy closer to a downturn as a pillar of strength is taken out.

Here are four fresh signs Americans consumers are close to tapped out.

1. Retail sales are falling

Retail sales slipped 0.1% in October, That marks the first decline recorded in seven months, a sign that consumers may not be able keep up with the frantic pace of spending seen over the summer.

Slowing spending can likely be attributed to a handful of factors, Kalish said, such as decelerating employment growth, price growth slowing, and a declining savings rate as Americans pay off their student debt balances.

"Overall, the retail sales report paints a picture of a consumer sector that is weakening. This was expected. The stunning growth of the economy in the third quarter was not expected to be sustained in the fourth quarter," he added.

2. Spending intentions have plummeted

The negative trend in retail sales could continue, as spending intentions among Americans have plummeted over the past few months, according to Deloitte's spending intentions index.

The index in October showed that on average, consumers said they were expecting to spend 18% less over the next four weeks. They also expect to save and invest 20% less over that time frame.

That's a big plunge from summertime spending intentions. In July, consumers said they planned to increase spending 5% over the next month, the highest reading the index saw all year.

3. People are trimming their grocery bills

Consumers are less likely to splurge on groceries, a sign Americans are now looking to cut expenses even in key areas of their budget.

Deloitte's Food Frugality Index rose to 109.1 in October, the highest reading seen all year. A higher frugality reading signals behaviors like purchasing low-cost ingredients, buying less food than consumers wanted, or slashing their grocery lists to just the essentials.

4. Financial health is weakening

Deloitte's financial well-being index continued to decline in the US, falling from a 12-month low of 93.7 to 90 in October. That reflects consumers' increasing negative feelings about their financial health and future financial security, the firm said.

Meanwhile, just 40% of those surveyed in the US said they believed they had enough money to live their best life five years from now, the firm added.

The financial well-being index is more personal than measures like the Conference Board's Consumer Confidence Survey, which gauges Americans' views on the economy, but not necessarily their own personal finances.