Stimulus and Consumption Are Fueling Economic Resilience

The lingering effects of pandemic stimulus combined with ongoing personal consumption are buoying the economy, even as it grapples with the rising challenges posed by high-interest rates.

Given the data at hand, a central question emerges: Will economic and consumption patterns return to their typical trajectories, or will the mounting pressures of high interest rates lead to a decline, or even reversal, in personal spending?

The future trajectory largely hinges on the state of the labor market. If it remains robust, it’s plausible that consumption and economic trends will settle back to pre-pandemic levels.

However, historical patterns suggest that increasing interest rates and credit shrinkage can suppress the economy. In such scenarios, consumers often prioritize boosting their savings and decreasing their debt over spending.