Monthly growth in household spending continued to slow in December 2023, although overall spending growth remained well above pre-pandemic levels, according to the Federal Reserve Bank of New York’s Household Spending Survey, part of the larger Survey of Consumer Expectations. The survey found that the percentage of households that made a large purchase during the past four months fell compared to August 2023 levels, although it increased for home repairs and electronics. Year-ahead overall household spending growth expectations similarly continued to moderate and reached 3% in December, the lowest reading since December 2020 but above pre-pandemic levels.
Median year-ahead expected growth in essential household spending—such as daily living expenses—declined, the New York Fed reported. The median year-ahead expected growth in non-essential household spending—such as hobbies, leisure and vacation—remained unchanged. Asked what respondents would do with an unexpected 10% increase in income, the average response that they would use the extra income to pay down debt increased to the highest level since August 2016, while the share who said the income would be spent declined to its lowest level since the series began in August 2015.
