Economics
Wells Fargo Report Says Consumers Will Shrug Off Interest Rate Hikes
The bank’s research shows consumers cut spending by 0.44 percent when rates rise 1 percent
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With the Federal Reserve signaling its intent to raise its benchmark interest rate for the first time since 2006, the question is, can the economy weather the tightening of monetary policy without slowing down?
The answer, according to Wells Fargo Securities, is that the economy will be able to clear this hurdle with ease. One reason is that consumers may not change their spending behavior the way they once did in response to interest rate shifts. That’s critical, as household spenders account for two-thirds of gross domestic product.