US consumers keep spending as inflation bites, but economists warn of limits ahead

US consumers continue spending despite accelerating inflation driven by high gas prices, which rose to 3.7% in September, far above the Federal Reserve's 2% target. Retail sales increased 0.8% in August, powered by higher gas station and restaurant spending, signaling short-term economic resilience. Wholesale prices jumped 6.3% year-over-year in September, the largest gain in nearly four years, with diesel costs up 20% monthly and averaging $6.32 a gallon. This has raised shipping and food costs, which rose 1.2% monthly, potentially making groceries pricier soon. Unemployment claims stayed below 200,000, a historically low figure, supporting continued consumer spending despite gloomy outlooks. Economists warn inflation will erode spending power, as inflation-adjusted weekly paychecks declined in September year-over-year for the first time since May. The Federal Reserve likely will raise its key interest rate again this year, potentially boosting borrowing costs for mortgages, car loans, and credit cards. September hiring slowed to 29,000 jobs, below expectations, with unemployment ticking up to 4.2%.