Last week Goldman Sachs CEO was added to the list of people that are calling for caution ahead as the probability of recession increases. This list already contained JP Morgan CEO, but the importance of this these two is not limited to banking in terms of wholesale but also in terms of retail. Though JP Morgan's CEO indicated that he views consumer spending to be stronger than expected over the next 6 to 9 months.
This will be true as the Bank of America report has claimed that people that had $2000 as a balance before the pandemic still have 3 to 5 times that balance. It also reported that the majority of consumer credit rating is still within the best score range. Thus, it does not give any indication of a reduction in consumer spending or borrowing capacity especially as festival season approaches.
These trends are visible globally though with some variations. This also leads to the current output and employs strength that is above expectations. But it also contributes to a stronger period of inflation.
Such a pattern will support further rate hikes that will be needed to lower consumer sentiment and put purchases on hold for the medium term. It is the only way that will result in the reduction of output and employment that would reduce the non-energy component of inflation.
If it does not go according to the expectations of central banks then the next leg of action will be more aggressive. It is because one way or another they need the inflation to be much lower without any upside risk like in the 1970s when the rate cuts happened much early and inflation rose to new highs.