American Consumers’ Shift in Spending Habits Helps Cool U.S. Inflation

The recent spike in U.S. inflation, which has persisted over the past three years, is beginning to decrease, largely thanks to American consumers. Companies like Amazon and Disney report that customers increasingly opt for more affordable alternatives, driving businesses to slow down or even cut their prices.

Economists note that while consumer spending remains strong, it has become more selective. This behavior contributes to the Federal Reserve’s goal of lowering inflation to its 2% target.

A Federal Reserve Bank of New York survey shows that Americans expect their spending to grow by only 4.9% in the next year, the lowest since April 2021, and they anticipate inflation to average just 2.3% over the next three years.

Despite the reduction in inflationary pressures, there are concerns about whether consumer caution could lead to an economic slowdown. Retail sales are expected to show a modest increase of 0.3% from June, indicating that while consumers are more vigilant, they are still spending.

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