Even as Americans face pressure from elevated grocery bills and rising rents, consumer spending is still strong, giving hope that inflation might ease without leading to a full-blown recession.

The Chief Economist of Moody's Analytics said in an interview before the data release that they are turning the corner on inflation.

The White House has been celebrating recent legislative victories, including a law aimed at boosting domestic Semiconductor manufacturing and the Senate's passage of a deficit-reducing package with funding for climate and health initiatives. The administration and the Fed miscalculated the increase in the cost of living.

According to new survey data published by the New York Fed, consumers are no longer expecting runaway prices to decimate their wages over the next three years. The central bank decides how much to raise rates based on expectations. Americans think gas prices will go up by 1.5 percent and food prices will go down by 2.5 percentage points.

It will take a lot more for President Joe Biden and the Democrats to change the narrative that spiking prices have overshadowed most of the economy's gains as it emerges from the pandemic.

Sen. Rick Scott of Florida, who is leading the effort to flip the Senate to Republican control, said in an interview that it is still going to be bad even if it comes down a little. He argued that the Senate package wouldn't cut it.

He said that when taxes are raised, they never get the tax revenue that they anticipate.

Even as prices continue to rise, Americans haven't stopped spending. While consumer confidence metrics are fading, MasterCard reported that year-over-year spending swelled by more than 11 percent last month.

Amazon probably had something to do with it.

The BofA Institute and Adobe both reported that Prime Day contributed to July spending. The discounts offered on Amazon can affect where we understand the consumer to be, in a very sort of price-sensitive state.

Consumers can take solace in the fact that online prices are lower.

In the past, economists have been premature in declaring that inflation has peaked, and several other indicators suggest that upward pressure on prices could last for some time. Even if the Fed doesn't cause a deep recession, it might still have to keep rates high for a long time.

Despite the likely peak in inflation, we have a lot more heavy lifting in front of us. We are not in a process that lasts a long time. We are in a process for a long time.

There is no clear picture of where the economy is going. Food and energy are included in the Consumer Price Index because they are more volatile than businesses. The Fed looks at measures that don't include those prices to see what's called core inflation.

The Fed Chair says that the difference between high and low inflation is unimportant at the moment. Core inflation rose less than expected in July.

Powell said the central bank is looking for multiple reports showing inflation cooling before it starts to ease off its interest rate hikes.

Rent has been one of the most troublesome inflation drivers. Higher mortgage rates are expected to slow the ascent of home prices.

Andrew Patterson, senior international economist at Vanguard, said he expects inflation to persist above 3 percent through the end of 2023 because of the high cost of housing.

Rents are persistently high if you get into the second half of the year. He said that they were going to be concerned about that.

The White House often cites the work of Zandi, who believes that rental prices will keep the Fed from hitting its target.

The strong labor markets will be a factor. Job openings were higher last month than at any point in the decade prior to the Covid-19 epidemic, despite the unemployment rate being at 3.5 percent. Wage increases have continued to accelerate, which could increase costs for employers, even as worker income fails to keep up with price increases.

The strong labor market has helped prop up bank balances across all income levels, which allows households to offset some of the pressure of rising prices.

34% of US households are renters, according to Zhou. Rent prices are going up.

If gas prices go up again, the squeeze will get tighter.

One White House official said Tuesday that administration officials were quick to cite any data point that reinforced their case that lowering inflation was Biden's priority. The Inflation Reduction Act and the new CHIPS and Sciences law are part of the messaging efforts.

The Fed's slow footing on inflation prior to the recent rate hikes has left the economy ill-suited to prepare for a soft landing.

The disinflation will come from gasoline and other commodity prices. Inflation isn't coming under control.