U.S. consumers are tapped out, as noted by Investopedia, and the economy is under pressure with weakening demand, as indicated by Morning Consult.

U.S. consumers are tapped out, as noted by Investopedia, and the economy is under pressure with weakening demand, as indicated by Morning Consult.

US consumers, the primary engine of economic growth, have shown signs of fatigue as noted in a recent report by Morning Consult [1]. Despite cooling inflation and a robust labor market, consumer demand is expected to soften, potentially slowing down the economy.

The report highlights several factors contributing to this shift in consumer behavior. One significant factor is the increasing price sensitivity of consumers. People are cutting back on discretionary purchases like vacations and concerts, even as price pressures decrease [1]. This trend is evident in the Morning Consult consumer health index, which has reached its lowest level in over two years [1].

Another factor is the depletion of savings and rising debt levels among consumers. Although inflation is cooling, the high cost of living has left consumers accustomed to being cautious with their spending [1]. This reluctance to spend, even on necessities, can have a ripple effect throughout the economy.

Economists are beginning to see cracks in consumer spending as shoppers may be running out of steam [1]. The labor market, which had been a significant driver of consumer spending, is also cooling down. This dynamic could further exacerbate the impact of weakened consumer demand on the economy.

According to a recent report by Northern Trust, US consumers are indeed tapped out [2]. The report suggests that the Fed's tightening of monetary policy, aimed at combating inflation, could further squeeze consumers' budgets. This could lead to a slowdown in consumer spending, potentially causing the economy to lose momentum.

In conclusion, US consumers, who have been the driving force behind the economic recovery from the pandemic, are now showing signs of fatigue. Factors such as price sensitivity, depleted savings, and rising debt levels are contributing to this shift in consumer behavior. This could have significant implications for the economy as a whole, potentially leading to a slowdown in growth.

References:
[1] Morning Consult. (2023, August 2). US Economy Coming Under Pressure as Consumer Demand Softens. Retrieved August 5, 2023, from https://www.investopedia.com/us-consumer-tapped-out-economy-morning-consult-report-8684536
[2] Tandon, V. (2023, August 2). Are US Consumers Tapped Out? Retrieved August 5, 2023, from https://www.northerntrust.com/united-states/insights-research/2024/weekly-economic-commentary/are-us-consumers-tapped-out