CINCINNATI — Home Depot has just confirmed what a lot of us have been feeling in recent months.
We are tapped out, and not spending as we did two years ago.
Remember "revenge spending?"
That was the stimulus check spending boom of 2021 and 2022 when shoppers snatched up new furniture, clothing, pools and more. Stores couldn't keep up with the demand, which led to higher prices.
Now, times have changed, and many consumers are cutting back, feeling tapped out.
Lori Gorbling, like many shoppers we recently found back-to-school shopping at a Kohl's store, is watching every dime she spends.
"It's very, expensive," she said. "It's not cheap."
Tina Day has also cut back.
"I usually look for deals, I try to stay within a budget," she told us while looking through the sale racks at Kohl's.
Next to Black Friday and the holiday season, late August is one of the busiest times of the year for stores.
That's because many families are buying school supplies and others are grabbing early Labor Day sales on furniture, appliances and more.
But, Home Depot has just reported weak earnings, implying that shoppers are cutting back on non-essentials.
Retailers, restaurants reporting slowdowns
The same cutbacks are hitting McDonalds and other restaurants, which have also reported slowdowns in traffic.
Economist Dr. Michael Jones of the University of Cincinnati said inflation has left many consumers with little spending money left, compared with two years ago.
"Consumer spending is actually outpacing income," he said. "So where does that increased spending come from? It has to come from savings."
A recent KPMG Consumer Pulse Survey said Americans planned to reduce their monthly budget, spending:
- 9% less on dining out
- 8% less on entertainment
- 7% less on travel and vacations
But one bright side: Less demand means less inflation, which should mean lower interest rates for borrowers, once the Federal Reserve cuts rates.
"We need it. We all need a break," shopper Mirium James said.
That's why the expected interest rate cut in September would be so helpful to consumers, as it would mean lower credit card and home equity loan rates.
That in turn would make it easier to do your next home improvement project and bring people back to stores like Home Depot.
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