The long-expected consumer pullback may finally be materializing

This revision in GDP numbers caught our attention: a downward revision in consumer spending in the third quarter. The initial estimate was 4%. It turned out to be 3.6%. Not as much, but also, not quite the great consumer pullback that seems to have been looming around the corner for months now.

Then, when you take a look at the blockbuster numbers from the start of the holiday shopping season, any kind of consumer restraint seems even further away.

But those numbers can be a little misleading.

Americans spent more than ever over the holiday. More than 200 million people — a record number — looked for deals in stores and online.

And while people spent a couple percent more this Black Friday weekend than last year’s, they didn’t necessarily buy more.

“Inflation was running at about 3.2% year over year basis. So if you look at Black Friday sales overall, they’re about down seven-tenths of a percentage,” said Silvio Tavares, CEO of credit rating agency VantageScore.

“So the reality is it’s a bit of a head fake. If you actually take into account inflation, consumers actually spent less this Black Friday,” Tavares said.

Tavares also warns that consumer credit card delinquencies are on the rise.

So with all of this holiday shopping, especially with many consumers leaning on buy now, pay later systems, “the concern is at some point, those credit card bills will come in, the ‘pay later’ of ‘buy now, pay’ later will come,” said Natalie Kotlyar, the retail industry leader at accounting firm BDO.

“And the consumers are going to be cutting as much as they can in making future purchases because the debt is becoming due or will become due,” Kotlyar said. Which could mean rough times for retailers after the holiday season.

Although some are feeling the pinch already. Rick Dreiling, CEO of Dollar Tree, spoke on a call with analysts Wednesday morning.

“Similar to what other retailers have reported, we experienced softening trends throughout the quarter. Lower income consumers responded to the accumulated impact of inflation and reduced government benefits. We saw a notable pullback in spending,” Dreiling said.

Retailers across the country are carefully watching how consumers across all income brackets are shopping this holiday season to see how significant that pullback is going to be.