The US Commerce Department reported that annual price growth fell to its lowest level in two years, but for consumers, rising interest rates and persistently high prices have taken their toll. Inflation-adjusted consumer spending remained flat in March, marking the fourth time in five months that expenditures held steady or declined. The trend suggests that January's spending burst is looking more like a one-off spurt. The chief economist at EY, Gregory Daco, said that the full effect of recent banking-sector turmoil and the associated tightening in financial conditions has yet to be felt. This should lead to the emergence of recessionary conditions by mid-year. However, high inflation on consumer packaged goods has plagued consumers for three years, and CPG prices were up 8.8% year over year, according to data from the consumer analytics company NIQ. The author estimates, "that consumers are spending $136 now for the same basket of goods that would have cost $100 in 2019, and they’re changing shopping behaviors as a result."
As well as, “If you ask the economists, ‘Are we in a recession?’ they’re going to say ‘No, we’re not in a recession,’” he said. “But we know that the way consumers are shopping and the way they’re adjusting to the rising cost of living is a recessionary mindset.”
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