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Co v er St o r y
CoverStory

Talk of a looming recession has picked up in recent months
as the Federal Reserve raised interest rates, which some Definitions vary, but
experts predict will dampen spending. But Jack Kleinhenz,
chief economist at the National Retail Federation, is more a recession is generally
optimistic, noting that the financial health of consumers is
strong, which bodes well for avoiding recession. considered several quarters of
significant economic decline as
"Regardless of the prospect of a downturn or whether
it will meet the threshold of a recession, the consumer evidenced by negative growth
outlook over the next few months remains favorable,"
Kleinhenz said. "The economy is moving away from in gross domestic product.
extremely strong growth toward moderate growth, but
increased income from employment gains, rising wages
and more hours worked is expected to support household Consumers cautious, but continue to spend
spending."
Against a backdrop of fears about inflation and recession,
Definitions vary, but a recession is generally considered consumer spending remains strong. The Federal Reserve
several quarters of significant economic decline as Bank of New York, which regularly collects data on
evidenced by negative growth in gross domestic product. consumer economic sentiment, reported an increase in
U.S. GDP shrank at an annual pace of 1.6 percent in the short-term inflation expectations on the part of consumers,
first quarter of 2022, according to the Bureau of Economic but a decline in medium- and longer-term expectations.
Analysis. That's a sharp reversal from the 6.9 percent
increase recorded in the fourth quarter of 2021. For example, expectations are that the inflation rate one
year from now will rise to 6.8 percent in June; in May
At press time, GDP data for the second quarter of this year the expected rate was 6.6 percent. The expected inflation
was not yet reported, but the Conference Board predicted rate for three years from now fell from 3.9 percent to 3.6
GDP growth of just 0.8 percent for the quarter. percent, the New York Fed reported.

The research group stated that it does not believe the The Bank of America Institute reported that total
U.S. economy is in a recession, but added that "economic aggregated Bank of America credit and debit card
growth will continue to cool through 2022, and a short spending rose 11 percent year-over-year in June 2022,
mild recession is on the horizon. High inflation and rapid following year-over-year increases of 9 percent in April
monetary tightening [by the Fed] are the drivers." and 13 percent in May. Spending growth per household
increased 3.3 percent year-over-year in the 28 days before
June 30, the think tank noted. Rising gas prices are driving
Call me today! some increases, but spending on services like travel
Let me help you and entertainment continues to be boosted by pent-up
demand, BofA said.
with your
advertising According to the Mastercard SpendingPulse, which
measures in-store and online retail sales across all forms
success. of payment, U.S. consumer retail spending, excluding
automotive, rose 9.5 percent year-over-year in June;
707-284-1693 excluding auto and gas spending it was up 6.1 percent
year-over-year. When compared to June 2019 (or pre-
pandemic spending) total retail spending, excluding auto,
was up 20.8 percent year-over-year, Mastercard said.

Consumer spending represents about two-thirds of the
U.S. economy, according to the Fed.

"Consumers are in better shape to respond to a slowdown
in the U.S. economy than they have been in many previous
business cycles," said David Tinsley, senior economist at
R R ick Aston the Bank of America Institute. "But with some slowdown
in services spending, we may need to wait until summer
Senior Media Partnership Specialist is over to get a clearer picture of the strength of the
Rick@greensheet.com underlying consumer momentum."

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