Consumers have felt bad about the economy since the middle of last year when inflation kicked off in earnest. Consumer Sentiment rose slightly in September, but it remains historically low.
- Consumers are still spending despite their sour feelings about the overall economy though. Retail sales rose last month.
Why it matters: If consumers keep spending despite all the headwinds in the economy, we may be able to have a “soft-landing” from the Fed raising interest rates to quell inflation.
- The economy might slow, but not to the point of widespread economic pain, while inflation returns to normal levels.
Be smart: Consumer spending strength reflects a fully open economy, savings remaining high, and a strong labor market. Usually, when consumers are bearish on the economy, they don’t spend this strongly. We are in a unique economic moment.
—Curtis Dubay, Chief Economist, U.S. Chamber of Commerce
