The current resilience of U.S. consumer spending isn't expected to last long due to persistently high inflation and restrictive monetary policy. Households have been able to sustain their spending in the face of inflation by saving less, by reducing the savings they amassed during the Covid-19 pandemic, or by accessing credit. With savings fading and credit costs rising, personal consumption expenditures are set to slow to 1.7% in 2023 from 2.7% this year. We note, however, even if households get spooked and spending slows more in the near term than we expect, healthy balance sheets and manageable debt loads should prevent a downturn from being severe. - Wells Fargo Securities
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