U.S.: Consumers May Just Keep Flexing Their Muscles

U.S. consumers have shown repeatedly in recent years their ability to cope with any number of obstacles standing between them and the retail object of their affection. And in 2005 their urge to splurge will face more tests amid some new challenges, including rising inflation, record gasoline prices, and higher interest rates. All that comes on top of some old burdens, such as heavy debt and a low savings rate.

The question: Can consumers handle it all and keep spending at a pace that will keep the economy moving forward at a healthy clip? After all, with gasoline prices already averaging $2.40 per gallon in parts of the West Coast, many SUV owners may soon be forking over more than $50 to fill up their 20-gallon tanks.