It’s normally peak season at Asurion Phone & Tech Repair, but Gean Rodriguez said foot traffic has slowed down in the last couple of weeks. The Chicago repair technician wonders if cooler weather is keeping customers at home, or if people are saving their money for the holidays.

Without the answers, he’s waiting for business to pick back up to more normal levels, all while the company contends with bungled supply chains and high costs for electronic parts.

“We barely have anything at the moment,” Rodriguez said. “We’re hopeful for more business. Some people might try to save their money for the holidays, presents, reunions, things like that.”

The slowdown at Rodriguez’s shop may offer a snapshot of the nation’s economy as it heads into the final stretch of the year. Policymakers are rushing to cool off demand and get control of inflation, hiking interest rates at the most aggressive pace in decades. Fed officials have slashed their expectations for growth this year, and the risks of a recession, in the United States and around the globe, appear likelier by the week. A number of economists are bracing for a downturn in late 2022 or early 2023.

But fresh data in recent days suggests the economy isn’t sputtering quite yet, and that two of the economy’s main engines are still revving. The labor market remains incredibly tight, based on data released Thursday. On Friday, a new government report showed consumer spending and personal incomes both rose in August, even while inflation remained high. Another survey showed that consumer confidence has recovered since early summer, when gas prices were much higher.

Many households and businesses are caught in the middle of this economy tension, straining to absorb high prices but not yet experiencing the pain some Federal Reserve officials say is coming.


Economic unease is sinking in. All the major stock indexes closed out the month on a bleak note, and the Dow Jones industrial average was down 5.4 percent for the third quarter, which ended Friday. The housing market is cooling off, with the highest mortgage rates in 15 years discouraging aspiring buyers. Retailers are already starting to discount items for the holidays, hoping to attract increasingly budget-conscious shoppers.

U.S. stocks slipped Friday – with all three U.S. indexes down at least 1.5 percent – and closed out a brutal week, month and quarter. The Dow Jones industrial average fell 500 points on Friday and closed below 29,000 for the first time since November 2020. The S&P 500 was down 1.51 percent and notched its worst month since March 2020. All three indexes are down at least 21 percent for the year.

On Friday morning, one analyst note summed up the mess with the title, “Wake Me Up When September Ends.”

There is growing evidence of jittery consumers. Apple shares slumped this week after a report that the company was cutting a planned production increase of its newest iPhone. In other parts of the tech industry – often seen as a bellwether for the economy as a whole – normally resilient companies indicated they were enforcing hiring freezes. Some analysts think the industry is possibly bracing for a slowdown in consumer spending.

“It shouldn’t surprise anybody that stocks are down, and they can’t really go up,” said Tom Essaye, president of Sevens Report Research. “We have to have good things happen, and we don’t have many good things happening.”

“We have an economy that is starting to show signs of slowing,” he added.


Perhaps the strongest example is the housing market, which has been cooling ever since the Fed began raising rates this spring. And it is clearly cooling faster as rates push higher. The average rate for a 30-year fixed mortgage, the most popular home-loan product, hit 6.7 percent this week, according to data released Thursday by Freddie Mac, a level unseen since July 2007.

U.S. home prices slid in July compared to June, marking the first month-to-month decline since January 2019, according to the closely watched S&P CoreLogic Case-Shiller National Home Price Index. There are even early signs that rental prices may be easing.

People with lower incomes have been feeling the strain of inflation for months. More recently, the stock market’s tumble, and investor fears of a looming recession, are being felt by higher-income earners.

Dick Pfister, CEO of AlphaCore Wealth Advisory, said his clients – who generally are worth between $1 million and $15 million and are often planning for retirement or budgeting on a fixed income – are starting to be more proactive with budgeting as “stock, real estate and bonds have all gone down together,” affecting their assets.

“It’s taken them a little bit longer to feel the pain but it’s starting to affect them too,” he said.

Yet the stock market’s tumultuous quarter came as other parts of the economy churned. The strength of the job market has continued to surprise policymakers and economists alike, with employers adding 315,000 jobs in August. Consumer sentiment has improved since it bottomed out amid skyrocketing gas prices in June. And even though the economy shrunk in the first two quarters of the year, it doesn’t appear that the economy is in a recession – yet.


With uncertainty about what’s next, companies are showing signs that they are preparing for a possible drop-off in consumer spending if inflation persists at high levels and the stock market remains rocky.

Bloomberg reported this week that Apple is turning away from a planned increase in production of its newest iPhone. Apple did not confirm the report or comment.

Bank of America downgraded the stock in the days after the report, saying that “weaker consumer demand” could pose a risk to Apple’s business. Apple’s stock has spiraled down more than 7 percent since Monday afternoon, sending other tech stocks sinking.

Major tech firms are also tightening their budgets, particularly related to hiring.

The caution coming from tech companies could spook other industries, which are waiting to see if consumer spending will fall.

“[The tech giants] aren’t doing that for fun,” Essaye said. “They’re doing it because whatever they’re modeling, they’re seeing a drop in demand coming.”


It could just be cautious planning. It’s too soon to say if Apple’s reported production cut is a judgment call on overall consumer demand, said consumer tech analyst Carolina Milanesi, who noted that Apple is reportedly seeing higher demand for its higher-priced iPhones.

“If Apple is seeing the impact of the economic recession then that’s really bad news for everybody else, because Apple commands so much of the higher-end market,” she said. “But at the same time, I do think it’s a little early to draw conclusions.”

Target and Walmart are trying to assuage consumer budget concerns by starting holiday discounts early this year, the major retailers said last week. And Amazon seems to be following suit. The e-commerce giant announced this week it would hold a “Prime Early Access Sale” on Oct. 11 and 12 for members of its subscription program. The sale has similarities to Amazon’s annual Prime Day, which occurred in July. (Amazon founder Jeff Bezos owns The Washington Post.)

The early deals from retailers could be, in part, attributed to companies ensuring that they do not have too much inventory if consumers have less money in coming months, said Forrester retail analyst Sucharita Kodali. Nike’s stock plummeted this week after the athletic retailer said it was increasing discounts and faced excess inventory.

Retailers aren’t panicking, Kodali said, and business is still trending well. But they, like other industries, are on guard that consumer spending could be “curtailed” in the future.

“Everyone seems to be hunkering down anticipating a recession,” she said in an email.


Signals from the Federal Reserve help explain why. Last week, the Federal Reserve hiked rates yet again by 0.75 percentage points, and the bank is expected to hike them twice more before the end of the year. Since the spring, the Fed has hoisted that rate from near zero to between 3 percent and 3.25 percent, and is expected to raise rates to 4.25 percent to 4.5 percent by the end of the year.

Policymakers say they won’t back down on their rate increases until there are clear signs inflation is slowing down, despite recession risks. Economists say such aggressive hikes compound the risk that the Fed goes too far, especially since monetary policy operates with a lag and global central banks are all hoisting rates at once.

Tom Barkin, president of the Richmond Fed, sketched out two paths. If the Fed doesn’t raise rates enough, he said, inflation could fester and force the central bank to act more aggressively later on. Or, he said, the Fed could step in aggressively now and attempt to push inflation back closer to normal levels.

“The analogy I’ve been experimenting with in my head is you’re pulling at a stuck door, and you need to open the door, and so you keep sort of pulling at it,” Barkin said in an interview with The Post. “If you pull too hard you might stumble, but hopefully stay on your feet. What you don’t want to do is pull so hard you pull the doorknob out.”

In Santa Monica, Calif., Bundy Auto Sales hasn’t felt the consequences of the Fed pulling on that door just yet. Owner Sylvester Villareal said his company, which specializes in used cars and rentals, has a stable fleet and plenty of bookings, especially longer-term rentals for customers waiting for their Teslas to arrive.

Around town, Villareal sees other signs of an economy that isn’t reversing yet. Costco is busy. So is a local high-end grocery store. Homes are still selling at high prices.

“Around where I work, it’s not a blue-collar area, but it’s not a rich area,” Villareal said. “The houses sell immediately. That’s just supply and demand. Because of interest rates, the payments are higher. But I don’t see anything slowing up.”

The Washington Post’s Gerrit De Vynck and Naomi Nix contributed to this report.

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