Consumers will do the bulk of the new spending...Of course, as interest rates rise, growth in the sales of big ticket items — cars, houses, and other durables — should stabilize and return to more normal levels.

Consumers are like the Energizer bunny: their spending growth goes on and on.

[Consumers] are capitalizing on low mortgage rates by increasing their mortgage debt, while at the same time reducing other debt obligations...So, all in all, the consumer sector’s financial situation appears to be reasonably sound and should provide a firm base for continued growth in consumer spending as incomes and employment expand.

New job growth and rising household income have been and will continue to support growth in consumer spending and overall. However, in the current rising interest rate environment; growth in big ticket items--such as cars, houses, and other durables--should stabilize and therefore play a less significant role than in past quarters in consumer spending's contribution to economic growth.

Rising asset prices support household consumption, whereas falling asset prices damp consumption. In a scenario of collapse, the damage to balance sheets and private wealth could go as far as undermining the soundness of the financial system and threatening stability of the real economy.

In the last couple of months, we have had a kind of soft spot...It's been in some ways broad-based...In part, the slowdown is due to higher energy prices...It's natural to see both confidence decline and spending on other things take a dive...But I wouldn't want to exaggerate the softness...The job market seems pretty strong...Oil prices have backed off some...[This is] a transitory slowdown as consumers adjust and then consumer spending will pick up again toward a more normal level.  We have a pretty sustainable expansion here.

By increasing the return to saving and by damping the upward momentum in housing prices, rising interest rates should induce an increase in the personal savings rate, and thereby lessen one of the significant spending imbalances.

To the extent that current spending behavior is built on realistic expectations--in particular, for future short-term interest rates, the exchange rate, rates of return on capital investments in the United States relative to those abroad, and housing price appreciation--the transition should be relatively orderly: Asset prices should adjust gradually to changing developments, as should the spending patterns of households and firms. But if current expectations are badly distorted, then the way forward may not be so smooth...In such circumstances, asset prices can adjust sharply, and private spending may also respond quickly, making it difficult for monetary and fiscal policy actions to provide a timely enough counterweight to keep the economy continuously on track.

We have had some recent readings, the trade and retail sales, that suggest maybe we hit a soft-spot in March...I think we are probably seeing energy prices beginning to impact consumers.

Consumer spending also has continued to expand, although higher energy prices may be crimping household purchases recently.

In the housing market, prices are unlikely to fall on a national basis, but the increases well above the rise in rents and incomes that we have seen in recent years cannot continue indefinitely, and rising interest rates will probably damp these increases even more. Home building should cool a bit as a result, but perhaps more consequentially, as capital gains on housing slow, households will likely turn to reducing the growth of their consumption out of current income as a way of building assets to finance their children's education, their retirement, and so forth.

On the demand side, consumers will continue to spend at a good pace...Looking forward, steady job growth and rising household incomes will fuel continued growth in consumer spending, replacing the stimulative effects of low interest rates and tax rate reductions, which were key to the earlier period of continued consumption growth.

With gasoline prices rising to substantially over two dollars a gallon, consumers may find that growth in their discretionary spending must slow in order to accommodate the increased cost of filling their gas tanks. Similarly, rising energy costs could curtail businesses’ capacity to increase their investment spending. The bottom line is that oil prices persistently in the $50 per barrel plus range could slow the pace of domestic demand growth this year, though they should not jeopardize the expansion itself.

The counter-cyclical monetary policy the Fed implemented gave consumers the opportunity to borrow at relatively low interest rates, and they certainly seized it. Households increased their purchases of homes and durables at record rates, dampening the breadth and depth of the past recession.

After the economic expansion stumbled in the spring of last year, it now looks to be on a firmer footing. A broad range of economic data suggests that real GDP is growing noticeably above trend...We’ve seen vigorous growth in business spending and solid growth in consumer spending.