Consumer spending in the US is expected to slow down in the fourth quarter of this year, Fitch Ratings said in a statement on Wednesday.
Some of the reasons behind the expected slowdown were listed as cooling in labor market, slowing wage growth, and the lagged effect of the Federal Reserve's aggressive monetary tightening cycle.
"The resumption of student loan payments in Q423 is likely to modestly dampen consumption by less than 10 bps," said the statement.
"Consumers continue to draw down large savings buffers built through the height of the coronavirus pandemic," it added.
The rating agency estimates that 80% of excess savings accumulated during the pandemic has been expended to support spending between August 2021 and July 2023.
Real consumer spending grew at an annualized rate of 4.3% in the first quarter of this year, slowing to 1.7% in the second quarter, but it is estimated to rebound to 3% in the third quarter.
Fitch, however, expects real consumer spending to slow down to an annualized rate of 1.2% in the fourth quarter, and forecasts contracting 0.8% in the first quarter of next year and coming in at 3% in the second quarter of 2024, AA reports.
