Cautious But Steady Consumers Buoying Hopes for Economy

WASHINGTON — Call it the Goldilocks consumer.

Defying high inflation and sharp interest rate hikes, Americans keep spending — a trend that, if sustained, could keep the economy humming just enough to help avoid a much-predicted recession, according to an Associated Press report.

At the same time, surveys show that consumers on average don’t expect today’s still-high inflation to last for very long. That confidence could lead them to moderate their spending habits and wage demands, which would help slow inflation over time.

If the combination lasts, it could make it easier for the Federal Reserve to tame inflation without derailing the economy. As inflation eased, the Fed would be able to curtail its rate hikes, making a recession less likely.

“The economy is in the middling phase,” said Neil Saunders, managing director of GlobalData Retail. “It’s not too hot but not too cold, especially for retail. Things are not in the boom phase, but neither have they collapsed.”

Nearly three years after the pandemic caused a brief but brutal recession and then a powerful rebound, the economy appears to have entered a phase in which growth might not be so forceful as to fuel high inflation. One reason is that consumers are continuing to spend — just not at breakneck speed.

Read the full Associated Press report.

Source: https://rvbusiness.com/cautious-but-steady-consumers-buoying-hopes-for-us-economy/