It’s usually peak season at Asurion Phone & Tech Repair, but Gean Rodriguez said foot traffic has been slow for the past few weeks. The Chicago repair technician wonders if colder weather is keeping customers at home, or if people are saving their money for the holidays.

Without the answers, he’s waiting for business to pick back up to more normal levels, while the company contends with bungled supply chains and high costs for electronic parts.

“We barely have anything right now,” Rodriguez said. “We are hopeful for more business. Some people might try to save their money for the holidays, gifts, reunions, things like that.”

Mortgage rates hit 6.7 percent as the housing market continues to cool

The slowdown in Rodriguez’s store may provide insight into the nation’s economy as it enters the final stretch of the year. Policy makers are in a rush to moderate demand and get inflation under control, raising interest rates at the most aggressive pace in years. Fed officials have lowered their expectations for growth this year, and the risks of a recession, in the United States and around the world, appear to be receding by the week. Some economists are preparing for a downturn in late 2022 or early 2023.

But recent data suggests that the economy is not sputtering yet, and that two of the main engines of the economy are still revving up. The labor market remains extremely tight, based on data released Thursday. On Friday, a new government report showed consumer spending and personal income both rose in August, even as inflation remained high. Another survey showed that consumer confidence has recovered since the beginning of the summer, when gas prices were much higher.

Many households and businesses are caught in the middle of this economic strain, straining to absorb high prices but not yet suffering the pain, some incoming Federal Reserve officials say.

Economic unrest is setting in. All the major stock indexes closed the month on a gloomy note, and the Dow Jones industrial average was down 5.4 percent for the third quarter, which ended Friday. The housing market is fresher, with the highest mortgage rates in 15 years scaring off potential buyers. Retailers are already starting to discount items for the holidays, hoping to attract increasingly budget-conscious shoppers.

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US stocks slipped on Friday – with all three US indexes down at least 1.5 per cent – and closed out a brutal week, month and quarter. The Dow Jones industrial average fell 500 points on Friday and closed below 29,000 for the first time since November 2020. The S&P 500 was down 1.51 percent for its worst month since March 2020. All three indexes are down at least 21 percent for the year.

On Friday morning, one analyst note summed up the mess with the headline, “Wake Me Up When September Ends.”

There is growing evidence that consumers are jittery. Apple shares fell this week after a report that the company was cutting back on a planned production increase for its newest iPhone. In other parts of the tech industry — often seen as a bellwether for the economy as a whole — generally resilient companies indicated they were enforcing a hiring freeze. Some analysts think the industry may be bracing for a slowdown in consumer spending.

“It shouldn’t surprise anyone that stocks are down, and they can’t really go up,” said Tom Essaye, president of Sevens Report Research. “We have to have good things, and there’s not a lot of good things happening.”

“We have an economy that is starting to show signs of slowing down,” he said.

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Perhaps the strongest example is the housing market, which cooling since the Fed began raising rates next spring. And it is clearly cooled faster as rates are pushed higher. The average rate for a 30-year fixed mortgage, the most popular home loan product, hit 6.7 percent this week, according to data released Thursday by Freddie Mac, a level not seen since July 2007.

US home prices slipped in July compared to June, marking the first month-on-month decline since January 2019, according to the closely watched S&P CoreLogic Case-Shiller National Home Price Index. There are even early signs that rental prices may be easing.

People on lower incomes have been feeling the pressure of inflation for months. Recently, the stock market has fallen, and investors fear the impending recession, felt by higher income earners.

Dick Pfister, CEO of AlphaCore Wealth Advisory, said his clients — typically worth between $1 million and $15 million and often planning for retirement or budgeting for a fixed income — are starting to be more proactive with budgeting because “ stock, real estate and bonds have all gone down together,” affecting their assets.

“It took them a little longer to feel the pain but it’s affecting them too,” he said.

But the stock market’s fourth quarter came as other parts of the economy faltered. The strength of the job market surprised policymakers and economists alike, with employers adding 315,000 jobs in August. Consumer sentiment has improved since it ended amid falling gas prices in June. And while the economy has changed in the first two quarters of the year, it doesn’t look like the economy is in recession — yet.

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With uncertainty about what lies ahead, companies are showing signs that they are preparing for a possible fallout in consumer spending if inflation continues at high levels and the stock market remains rocky.

Bloomberg reported this week that Apple is backing off on a planned increase in production of its newest iPhone. Apple has not confirmed the report or comment.

Bank of America downgraded the stock in the days following the report, saying that “weaker consumer demand” could pose a risk to Apple’s business. Apple stock is down more than 7 percent since Monday afternoon, sending other technology stocks sinking.

Big tech firms are also tightening their budgets, especially when it comes to hiring.

The warning from tech companies could spook other industries, which are waiting to see if consumer spending will fall.

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“[The tech giants] not doing that for fun,” Essaye said. “They’re doing it because no matter what they’re modeling, they see a drop in demand coming.”

It could just be careful planning. It’s too early to say whether Apple’s reported production cut is a judgment on overall consumer demand, said consumer technology analyst Carolina Milanesi, who noted that Apple has reportedly seen higher demand on their higher priced iPhones.

“If Apple is looking at the impact of the recession, that’s really bad news for everybody else, because Apple commands so much of the high-end market,” she said. “But at the same time, I think it’s a little early to draw conclusions.”

Target and Walmart are trying to ease consumer budget worries by starting holiday discounts early this year, the major retailers said last week. And Amazon seems to be following suit. The e-commerce giant announced this week that it would be holding a “Prime Early Access Sale” on October 11 and 12 for members of its subscription program. The sale is similar to Amazon’s annual Prime Day, which took place in July. (Amazon founder Jeff Bezos owns The Washington Post.)

The early deals from retailers could be attributed, in part, to companies making sure they don’t have too much inventory if consumers have less money in the coming months, said Forrester retail analyst Sucharita Kodali. Nike stock fell this week after the athletic retailer said it was ramping up discounts and faced excess inventory.

Retailers are not panicking, Kodali said, and business is still trending well. But they, like other industries, are wary that consumer spending could be “cut” in the future.

“Everyone seems to be hunkering down in anticipation of a recession,” she said in an email.

Signals from the Federal Reserve explain why. Last week, the Federal Reserve raised rates again by 0.75 percentage points, and the bank is expected to raise them twice more before the end of the year. Since the spring, that nutrition has been raised rate from near zero to between 3 percent and 3.25 percent, and is expected to raise rates to 4.25 percent to 4.5 percent by the end of the year.

Policymakers say they will not back off on their rate hikes until there are clear signs that inflation is slowing, despite recession risks. Economists say such aggressive hikes increase the risk of the Fed going too far, especially since monetary policy works with lag and all the world’s central banks are raising rates at the same time.

Tom Barkin, president of the Richmond Fed, outlined two paths. If the Fed doesn’t raise rates enough, he said, inflation could shrink and force the central bank to act more aggressively later. Or, he said, the Fed could intervene strongly now and try to push inflation back closer to normal levels.

“The analogy I’ve been testing in my head is that you’re pulling on a stuck door, and you need to open the door, so you keep pulling on it,” Barkin said in an interview with The Post . “If you pull too hard you might hear, but I hope you stay on your feet. What you don’t want to do is pull so hard that you pull the doorknob out.”

In Santa Monica, Calif., Bundy Auto Sales hasn’t yet felt the effects of the Fed slamming that door. Owner Sylvester Villareal said his company, which specializes in used cars and rentals, especially longer-term rentals for customers waiting to get their Teslas, has a stable fleet and plenty of reservations.

Around town, Villareal sees other signs of an economy that isn’t slowing down just yet. Costco is busy. So is a local high-end grocery store. Homes are still selling at high prices.

“Around where I work, it’s not a blue-collar area, but it’s not an affluent area,” Villareal said. “The houses sell immediately. That’s just supply and demand. Because of interest rates, the payments are higher. But I don’t see anything slowing down.”

Gerrit De Vynck and Naomi Nix contributed to this report.

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