Americans still have money to spend despite high inflation

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Something unexpected is going on in the U.S. economy.
Inflation remains high, yet many Americans went on a spending spree last month, eating out at restaurants and shopping for cars.
In ordinary times, that additional spending would be welcome news to an economy that’s heavily dependent on consumer dollars.
But there’s a catch: All that spending threatens to put more upward pressure on inflation at a time when the Federal Reserve is raising interest rates aggressively to keep prices in check.
That makes it critical to gauge how long that consumer spending can last.
A drop in consumer spending would help to cool inflation, but it would also raise concerns about a recession. On the other hand, if spending continues to grow at this pace, it could force the Fed to raise interest rates even more aggressively to bring prices under control.
Here are three things to know about Americans’ spending habits and what they mean for the U.S. economy.
Just when it seemed that consumers were running out of gas, shoppers appeared to be getting a second wind.
Personal spending rose 1.8% in January, according to the Commerce Department on Friday, as consumers splurged on both goods as well as services like going out for meals or the movies.
Lots of people have money in their pockets to spend, thanks to strong job growth and rising wages. Retirees also got a raise this year. Social Security benefits rose by 8.7% in January, the largest cost-of-living increase in four decades.