Consumers defy inflation to support economy. For how long?

Posted at 8:18 PM, May 22, 2022
and last updated 2022-05-22 23:18:52-04

WASHINGTON (AP)  — With prices across the economy soaring at their fastest pace in decades, you might think Americans would tap the brakes on spending. Not so far.

Consumers as a whole are showing surprising resilience, not only sustaining their spending but increasing it even after adjusting for inflation.

That spending is helping allay concerns that a recession might be near.

Yet there are signs that some people, especially in lower-income households, are starting to cut back.

How long consumers as a whole continue to spend at healthy levels despite the pressures from inflation will be key to whether the U.S. can avoid a recession as the Federal Reserve raises borrowing rates.