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Updated on: May 29, 2026 / 5:47 PM EDT
/ CBS News
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For years, American consumers have defied predictions and kept the economy moving forward with their spending even amid a raft of financial pressures. Yet signs of financial strain are emerging as households grapple with the highest inflation rate in nearly three years.Consumer spending drives about 70% of U.S. economic activity, raising concerns about a slowdown if Americans pull back amid an ongoing spike in energy prices. "If gas prices stay elevated, middle-income families will likely face more tradeoffs. For most households, gas isn't optional — it's how they get to work, take care of their families and manage daily life," said Glenn Williams, CEO of Primerica, a provider of financial products. Inflation tends to hit low- and middle-income households hardest because they spend a greater share of their income on basics such as gas and food. To be sure, consumer spending is still growing, and U.S. households overall remain on sound financial footing. Driven by robust corporate profits, the stock market has also notched a succession of record highs, boosting investors. But with the nation's GDP expanding at a modest 1.6% annual pace in the first quarter, some experts caution that consumers may soon run out of steam. Read on to see what's keeping some economists up at night. Income growth lagging inflationTwo key inflation metrics — the Consumer Price Index and the Personal Consumption Expenditures (PCE) price index — show that many Americans' incomes are falling behind inflation. That means millions of households are losing purchasing power as consumer prices outpace their income.
