Consumer spending has been a bright spot in the U.S. economy, but as the holiday shopping season kicks off against a backdrop of a record high inflation and slowing economic growth, will they remain so?

It's been a very mixed bag on the consumer side. You're still seeing a lot of

strength in certain categories where we've seen more of a pullback are bigger

ticket items and more one-time purchase items that you only buy maybe once every couple of

years or maybe in some cases seven or eight years like consumer electronics and

home furnishings. I'm Allison Nathan and this is exchanges at Goldman Sachs.

To help us understand the state of the consumer, I'm sitting down with my colleagues in Goldman Sachs research, David Miracle, our chief U.S. economist, Kate McShane, who covers the U.S. retail sector, and Eric Sheridan who follows the U.S. retail sector and Eric Sheridan who follows the U.S. internet sector.

We'll dive into the health of the consumer and look at how and where they're spending.

David, Kate, and Eric, welcome back to the program.

Thank you.

Thank you.

David, you're looking at the consumer very closely but from a top-down perspective

how are consumers fearing right now? I think consumers are doing fine. In 2021 we had

blow-out consumption growth around 7%. This year in the first three quarters

it has slowed to about 1.5% on an annualized basis. But in this context where the Fed is trying to keep demand growth below potential so

that we can solve this inflation problem that's exactly what you want we've seen a

big slowdown we have not seen a contraction in consumer spending and a slowdown is

what policy makers are looking for.

And are consumers slowing down because they want to or because they have to?

So there is a lot going on here, but I break it into two drivers of recent consumer spending trends.

One is willingness to spend at the other is ability to spend or how much spending power you have.

On willingness to spend, a big part of the initial decline in

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