Americans Are Grumpy About Prices. Why Are They Still Spending?

Americans report record-low economic sentiment, yet consumer spending continues to rise, creating a puzzling decoupling of feelings and financial behavior. While inflation accounts for some of this increase, consumers are also purchasing a higher volume of goods. Wealthier, older Americans drive much of this activity, bolstered by significant gains in stock market portfolios and home equity. Conversely, lower-income individuals maintain spending through credit card debt and reduced savings, often prioritizing convenience services like food delivery. Low unemployment rates currently support this trend, but record-high credit card balances and dwindling savings suggest potential volatility. If these financial buffers erode, a sharp decline in consumer spending could threaten broader economic growth, leaving economists struggling to predict future outcomes based on traditional sentiment indicators.