Recent data from the U.S. government paints a clear picture: A surge in consumer spending is driving robust growth, a resilience that has confounded economists, Federal Reserve officials, and even the somewhat pessimistic sentiment expressed in opinion polls by Americans.

The government reported a significant 0.4% increase in consumer spending in September, even after adjusting for inflation and despite rising borrowing costs for Americans.

Economists caution that sustaining such vigorous spending in the months ahead is unlikely. Many households have been depleting their savings, and some have increasingly turned to credit cards, the Associated Press reported.

The additional savings accumulated by millions of households during the pandemic, resulting from stimulus aid and reduced opportunities for travel, dining out, and entertainment, are now nearly exhausted, according to economists.

Written by staff