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U.S. Consumer Spending Drops with Inflation Hitting 40-Year High (yahoo.com)
15 points by drocer88 on Feb 1, 2022 | hide | past | favorite | 2 comments



So does this mean that deflation is on the horizon? Consumer spending is what makes up most of all economies. People may have been panic spending due to the pandemic. If they think it is over or that they are now stocked up, they may retract spending severely to compensate for their previous spending. I don't see this possibility discussed at all in economic news reports. It may quickly solve the supply chain problems, but it could also (at least short term) depress spending and hence inflation, possibly even leading to short term deflation. Maybe there is some poll of consumer sentiment on near term spending that would provide some data? The data on spending does seem to indicate the start of a drop:

https://fred.stlouisfed.org/series/PCEC96


I think it might have more to do with the omicron wave hitting the US that resulted in decreased consumer spending.




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