The Federal Reserve is increasingly optimistic about achieving a 'soft landing' and avoiding a deep recession, but Americans' dwindling pandemic savings could dampen consumer spending.
KB Advisory founder Kristin Bentz discusses whether the U.S. economy is starting to see cracks in consumer spending on Making Money.
The economists suggested that the remaining savings could support consumer spending into the fourth quarter, but noted that "uncertainty surrounds this outlook, including the possibilities that households may now have a higher appetite for savings, significantly shift their spending habits, or receive other sources of income that offset the expired pandemic-era cash flows."
The economists wrote that the sharper decline in excess savings meant that those dollars played a bigger role in supporting demand in the U.S. economy over the last year: "Given the more rapid drawdown of excess savings, aggregate demand in the United States is likely to have been more than in other countries over the past year."
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