The consumer spending spree that’s propped up the economy and baffl⛦ed economists in recent months could continue going strong, according to a new analysis. 

Despite 澳洲幸运5官方开奖结果体彩网:high infl🏅ation over the last t𝔍wo years, the end of the 澳洲幸运5官方开奖结果体彩网:ultra-low interest rates of the pandemic, and the 澳洲幸运5官方开奖结果体彩网:return of payments on federal student loans, many U.S. households still have enough financial firepower to support their spending habits, researchers at the Federal Reserve Bank of New York said in a report released Wednesday.

The analysis sheds some light on a puzzle that’s vexed experts and policymakers lately. Officials at the Federal Reserve have raised interest rates to a 22-year high, pushing up borrowing costs on all kinds of loans 澳洲幸运5官方开奖结果体彩网:including mortgages, credit cardsꦡ, and car loans. The rates are an effort to discourage borrowing and spending and restrain roaring infl🌠ation by bringing supply and demand back into balance.

But somehow, many consum꧟ers have shrugged off the higher interest rates and have kept cash registers ringing—even as higher costs for basic necessities like food and housing have squeezed budgets. 

The researchers, analyzing the Fed’s consumer credit data as well as a survey of consumers, found that taken as a whole, U.S. households are in pretty good financial shape and plan to continue to ramp up their spending in the next year.  A key reason: Homeowners who took the opportunity to refinance their home loans when mortgage rates hit record lows during the pandemic are in especially good shape, having pocketed an astounding total of $400 billion by either 澳洲幸运5官方开奖结果体彩网:refinancing for lower mortga❀ge rates or by 澳洲幸运5官方开奖结果体彩网:cashing out on their home equity.

That’s on top of any “excess savings” that people managed to stockpile during the pandemic when spending opportunities were limited and people were supported by stimulus checks (whether or not they needed them). Economists are divided on 澳洲幸运5官方开奖结果体彩网:how much of that extra money is still out there in people’s bank accounts.

Another group benefited from COVID-19 policies. People with federal student loans didn’t have to pay interest or make their regular monthly payments from the onset of the pandemic until October, when COVID-related forbearance came to an end. Borrowers saved $260 billion from the pause, the researchers estimated.

That’s all contributed to consumers' willingness to spend. On average, people expect to increase their spending by 5.3% over the next year as of September, well above the 3.1% increase expected in February 2020, according to a New York Fed survey of consumers.

What’s more, the return of student loan payments may not slow down consumers very much. In a separate survey of student loan borrowers, a group of New York Fed researchers found that people with student loan payments planned to reduce their spending by $56 a month on average after payments came back, enough to reduce consumer expenditures by a total of $1.6 billion a month, or a modest 0.1 percentage points.

That assessment contrasts with that of other economists who have predicted budgets to be hit harder by the return of student loan payments. For instance, in September, Goldman Sachs economists estimated student loan payments would drag down spending by 0.8 percentage points. 

One reason for the New York Fed researchers’ more optimistic outlook: Their survey of 225 student loan borrowers indicated that among borrowers currently enrolled in a standard repayment plan, 20% planned to shift to an income-driven repayment plan such as the new SAVE plan, which significantly reduces 🦩m꧃onthly payments for many borrowers, especially for those with lower incomes.

Still, not every household's finances are similar. Delinquency ratesཧ on credit cards and auto loans have jumped to their former levels after plunging during the pandemic, according to the data. And some student loan borrowers will struggle to repay, with borrowe🐼rs reporting an average chance of 22.6% of missing a loan payment within the next three months.