Economy Holds Strong Despite Aggressive Fed Rate Hikes, But Eventual Slowdown Looms

Despite aggressive Fed interest rate hikes, the economy remains strong as seen in robust job growth and consumer spending on services like travel and entertainment.

Factors like excess savings and supply chain improvements have shielded parts of the economy, allowing continued growth in sectors like housing and auto sales.

The return of consumer spending to services and experiences instead of goods is driving substantial job gains in labor-intensive industries.

Companies across industries like travel, dining, and entertainment are seeing record demand and profits, with no signs of consumer pullback.

As temporary supports like savings cushion and supply gains fade, the full brunt of rate hikes may hit; the Fed must time eventual rate cuts well.