Economic Outlook and Consumer Behavior

The current U.S. economy showcases surprising strength, attributed to consumers having substantial cash reserves, which they are now using for discretionary spending. This includes increased demand for services, such as dining out and vacations, after the initial surge in goods purchases following the pandemic. However, vulnerabilities exist, particularly among low-income consumers who have been struggling, and middle-income consumers are beginning to show signs of financial strain as they take on more credit card debt. The overall picture suggests a potential weakening of the economy into the new year, despite current positive indicators.