At Marketplace, we are wont to say that consumer spending drives this economy, making up about two-thirds of the nation’s gross domestic product. And that consumers’ willingness to keep on spending robustly, in the face of inflation and high interest rates, is almost single-handedly keeping the economy out of recession.   

By the end of this week, we’ll get a good sense of whether consumers are still doing their part. July retail sales data, out Tuesday, is expected to be up, again. On the other hand, consumer sentiment slipped a bit at the beginning of this month.

But on the other, other hand, the New York Federal Reserve Bank reports that U.S. households feel their finances have improved from a year ago, though Americans are racking up more and more credit card debt.

So, what’s keeping consumers spending, month after month — even as inflation and rising interest rates eat away at family finances?  

One driver: “There was excess savings accumulated during the pandemic, and that has not gone away,” said Mark Hamrick at Bankrate.

Many upper-income folks still have money left over — to go on trips and buy new cars. Many lower- and middle-income Americans have spent down their savings to pay bills. But at least they’re still working, Hamrick said.

“And now we’re actually seeing [wages increasing] at or above the pace of inflation,” he added.

What folks can’t afford, they’re borrowing for.

Hamrick cited a recent Bankrate survey that found about half of Americans now carry a credit card balance month to month. That’s up nearly 10% since 2021.  

It’s risky because interest rates are high and balances keep going up. “We’re a sort of ‘kick the can’ economy,” Hamrick said.

You know — spend now, pay later.  

And what’s behind that? Consumer psychologist Ayelet Fishbach at the University of Chicago has some ideas.

“People don’t realize how much credit card debts are going to be a burden. And we see that people are struggling to think long-term,” Fishbach said.

She thinks this could be because of the pandemic … or domestic politics, geopolitical turmoil, climate change. Whatever the cause, it’s leading to an attitude of “enjoy life now because the future is too scary, it’s too unpredictable,” she said.

Another possibility: We’re actually getting used to all this hardship and unpredictability, said Regan Leggett, who tracks global consumer behavior at NIQ.  

“We’ll look at the last two to three years and feel a bit confident because ‘I’ve survived.’ You know, a lot of consumers experienced either job loss or income loss, but now they’re starting to feel a bit more on track,” Leggett said.

And that means spending — even if it’s money you don’t have right now — can feel all right.