The verdict is in, or almost. After Tuesday’s higher-than-expected inflation numbers, the Fed will most likely raise interest rates at its policy meeting next month.
Additionally, investors are now worried about a much more hawkish Fed in 2027.
Price pressures were so strong on essentials like food, rent and medical care that there is renewed talk that the Fed could impose a giant 50 basis point hike.
Expectations have clearly changed.
Higher costs also appear elsewhere. As in the data on how Americans spend their money. Consumers are “shifting to less expensive brands” at the highest levels since the height of the pandemic, according to a new analysis from the Bank of America Institute.
Data reveals that consumers are increasingly value conscious. People are buying store brands rather than name brands, going to cheaper retailers rather than department stores, and eating fast food rather than table service restaurants.
“As households continue to spend, they are increasingly looking for discounts as concerns about rising prices persist,” wrote Taylor Bowley, an economist at the Bank of America Institute. With a ton of deposit accounts, credit cards, and debit cards, the bank is in a unique position to track spending across a wide range of demographics.
The analysis showed that consumers appear increasingly value-focused, shifting their spending toward value-tier merchants at 2021 levels. According to the report, millennials – faced with the costs of raising a family, high housing, auto and childcare costs – are leading the shift to value-driven shopping.
This change is most pronounced in spending on clothing and groceries, suggesting that bargain hunting is not limited to discretionary purchases but now extends to everyday household spending.
“While consumers may delay clothing purchases, the price drops on groceries are noteworthy because they suggest that Millennials are looking for savings even in areas where spending is harder to avoid, like food,” the report said.
Follow Hamza Shaban on @hshaban.
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