Consumers Showing Resilience Despite Challenges, But Continued Vigilance Needed on Inflation and Policy Impacts

• Consumer sentiment declining but retail sales rebounding, signaling resilient consumers despite higher costs

• Consumers have remained remarkably resilient amid tightening policy and high inflation, though lower-income cohorts showing some strain

• Need to monitor impact of past rate hikes on consumers going forward as Fed considers potential cuts

• Hotter-than-expected inflation prints indicate disinflationary trend not yet passed, more data needed to assess trajectory

• Fed wants to see sustained disinflationary progress before shifting from tightening to potential loosening of policy