The three-year surge in inflation has largely subsided, and economists credit the American consumer for helping to temper it.
Several major American companies, from Amazon to Disney to Yum Brands, say their customers are now seeking cheaper products and services, or avoiding items they perceive as too expensive.
Consumers are not making the kind of big savings that could cause an economic downturn. Economists say they appear to be returning to pre-pandemic spending levels, where companies can’t raise prices arbitrarily without losing customers.
“While inflation is coming down, prices are still high, and I think consumers have reached a point where they can’t tolerate that any longer,” Tom Barkin, chief central banker at the Bank of Richmond, said last week at a business conference.
More price-sensitive consumers help explain why inflation appears to be heading steadily toward the central bank’s 2 percent target. That consumer behavior ends a period of very high prices that strained many people’s budgets and darkened the economic outlook.
It has also been a focus of debate in the presidential election, with inflation causing many Americans to be disappointed with the Biden-Harris administration's handling of the economy. (ps/jm)
