“Though many people fear an extreme cooling off of the economy, there is not an overwhelming amount of evidence to support such predictions,” National Retail Federation Chief Economist Jack Kleinhenz declared on June 1. “In general, the data suggests that we remain in an ongoing expansion.”

His observations follow an earlier report he and NRF issued also predicting that a strengthening of the economy will take place later this year.

The Federal Reserve faces “a tricky job” in addressing inflation but continuing growth in employment, wages and consumer spending make it unlikely the effort will backfire into a major setback for the economy, Kleinhenz asserted.

“With changes underway that focus on taming inflation without splintering the economy, the nation’s economic system is in the process of being rebalanced in ways that are testing its resilience,” he further explained.

The Fed increased interest rates by half a percentage point in May, following a quarter-point increase in March, and it is paring its holdings of Treasury bills, bonds, notes and other government securitie, all to tighten monetary policy and slow inflation.

The labor market is a key driver of consumer spending, and 428,000 jobs were added in April, topping the 400,000 for the 12th month in a row.

April retail sales reported by NRF – excluding automobile dealers, gasoline stations and restaurants – were up 0.9% seasonally adjusted from March and 6.4% year over year. On a three month moving average, sales were up 7.1% year over year.

Consumer spending is shifting from the pandemic-era focus on goods toward services as people re-engage in activities they had cut back on.

Data shows out-of-the-house “mobility” in retail and recreation was only 11% below its pre-pandemic trend as of mid-April and other measures such as the number of diners at restaurants, air traffic and hotel occupancy are close to 2019 rates.