Strong retail spending numbers cooling recession fears

Updated: Jul 16, 2022 / 10:34 AM EDT

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(NewsNation) — Fears of an impending recession have loomed over discussions around an economy that continues to give economists varying levels of worry as inflation and interest rates remain high, yet unemployment and spending remain strong.

Inflation has continued to spur fears of a recession, hitting 9.1% in June, leading to the Federal Reserve raising interest rates in an effort to cool the economy and prevent a recession. But, consumers for the most part have remained undeterred from spending as many Americans are employed and flush with spending cash.

Consumer spending makes up 70% of the U.S. economy, according to Kristin Myers, the editor-in-chief of The Balance. This means when consumer spending is up, which it currently is, it is a sign the economy is doing well.

“If consumers, if you and I and everyone else, continue to go out and spend our money, continue to go out shopping at stores, what it means is the U.S. economy can continue to grow, it can continue to stay strong,” Myers said.

Myers said anyone feeling anxious about a recession can look to retail sales numbers, which are up 1%, and “be able to put some of those anxieties at ease.”

“When we see those retail sales dropping, and dropping consistently for several months, that’s when people should really start to get worried,” Myers said.