U.S. Consumer Durability Faces Economic Crosswinds Amid Rising Costs and Policy Challenges

The durability of U.S. consumers, often key to propelling the economy, could face significant challenges in the coming weeks. Family budgets, especially among lower-income households, confront rising healthcare costs, potential cutbacks in federal food benefits, and a tenuous job market outlook, already impacting household earnings.

This November begins the traditionally bustling shopping and travel season, leading into Thanksgiving and Christmas. Yet, several economic uncertainties loom: possible food stamp cutbacks amid a government shutdown, increased healthcare costs if ACA subsidies are reduced, and declining consumer confidence amidst layoffs and higher prices. Economic resilience is essential, as RSM US chief economist Joseph Brusuelas warns of "adverse policy shocks" impacting the resilience and spending habits of U.S. shoppers.

Amid still-low unemployment and growing consumer spending—a 2.7% annual rate as of August—policymakers remain ill-equipped with updated data due to the shutdown halting essential reports. The impending termination of SNAP could impose major hardships on nearly 42 million low-income Americans, as supplemental benefits diminish. While some states seek to offset food benefit losses, plans fall short, underscoring the economic headwinds that demand careful observation and strategic response from policymakers.