Recent analysis by institutions suggests that US real consumer spending may grow by 2.4% in this quarter, sounds promising. But a closer look at the data reveals many issues.

The truth behind the consumption growth is quite sobering. Disposable income for high-income groups has only increased by 3.0%, and these groups are the main drivers of consumption. Once the stock market weakens and the wealth effect reverses, high-end consumption immediately slows down. In simple terms, current consumption growth is built on stock accounts, which carries significant risks.

What’s even more sobering is the inflation data. Saying inflation is "moderate"? Look at the core PCE over the past few months— from November to December, the monthly rate has rebounded to 0.15%-0.30%. Annualized, this means inflation is accelerating again. Institutions forecast that the core PCE in December will be 2.7% year-on-year, and it will take until December next year to return to 2.1%. Will the annual figure reach the 2% target? It’s uncertain.

Even more interesting is that various forecasting institutions have already begun to raise inflation expectations for 2025-2026. This indicates that market views on inflation are shifting. Strong consumption, rebounding inflation, support from high-income groups—how long can this combination last?