Inflation Starts to Drag on Consumers Powering US Economy

There are early signs that U.S. consumers, who have been largely resilient in the face of relentless inflation, are beginning to balk at high prices, according to a Bloomberg News report.

From Whirlpool Corp. to Procter & Gamble Co., companies are noting that shoppers are feeling the pinch, and in some cases buying less, a trend economists dub demand destruction. That may be a worrisome signal that consumer spending – the powerhouse of the US economy – is losing steam.

Economists expect data out Thursday to show inflation-adjusted personal consumption to have grown at just a 1% annualized pace in the third quarter, the weakest rate since the early days of the pandemic and half the pace seen in the previous quarter. Gross domestic product is projected to rebound in the period, but largely because of a decline in imports.

“It’s hard to really increase your consumption if your real income is heading lower,” said Sarah House, senior economist at Wells Fargo & Co. Households are instead having to rely on savings to help keep “consumption where it is.”

Read the full Bloomberg News report.

Source: https://rvbusiness.com/inflation-starts-to-drag-on-consumers-powering-us-economy/