Consumers are showing resilience after being squeezed by high inflation, rising interest rates and the end of federal Covid-relief programs. The U.S. economy started the year with surprising vigor, thanks partly to rising household incomes and consumer resilience. Slowing inflation, pay raises negotiated last year, cost-of-living adjustments for retirees and state tax cuts have lined up to lift consumer purchasing power, fortifying spending and economic growth at a time when many analysts were predicting a slowdown or even recession. This marks a turnabout for households that were squeezed last year by high inflation, climbing interest rates and the end of Covid-related federal relief programs.

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