Consumer Spending Flat in January; Credit Card Delinquencies Hit 12.7%
US retail sales were unchanged in January following a 0.2% gain in December, signaling stalled consumer purchases heading into Q1. The share of credit card accounts 90+ days past due climbed to 12.7%, the highest in two years, reflecting mounting household financial strain that could curb apparel demand.
1. Retail Sales Stall in January
January’s retail sales reading showed zero growth month-over-month after December’s 0.2% increase, with softening purchases in auto and electronics offsetting strength in essentials. This stagnation suggests consumers may pull back on discretionary items if economic pressures persist.
2. Credit Delinquencies Surge to 12.7%
The proportion of credit card accounts at least 90 days delinquent rose to 12.7%, the highest level in two years. Rising borrowing costs and inflationary pressures are straining household budgets and elevating default risk.
3. Implications for Levi Strauss
Sluggish consumer spending paired with rising delinquencies heightens downside risk for Levi Strauss, as reduced discretionary budgets may force the company to increase promotions or delay new launches, potentially squeezing margins and slowing revenue growth.