Warsh Suggests Further Rate Hikes Amid Consumer Caution

Kevin Warsh, Federal Reserve Chairman, stated at the Jackson Hole Symposium that financial conditions may remain restrictive and further rate hikes could be possible to combat inflation. This sentiment is reflected in McKinsey & Company's ConsumerWise survey, which found that consumers are cautious about spending due to high prices.

The survey of over 4,000 U.S. consumers revealed a net spending intent of -1 in the third quarter of 2026, indicating a balanced market where spending is holding steady. However, when looking at individual categories, many showed negative scores, with pet-care services being the only one with a net spending intent above zero.

Consumers reported feeling pessimistic about economic conditions, with one in four respondents expressing this sentiment. Rising prices and inflation were their greatest concern, cited by 53% of respondents. Despite these concerns, consumers plan to spend the same or more on holiday shopping compared to last year, with 45% expecting to begin their holiday shopping by the end of October.

AI is becoming an increasingly important part of the consumer's holiday shopping plan, with 46% saying they will definitely or probably use AI tools. Among likely AI users, comparison and value are key, with 49% planning to compare products or prices, 48% looking for deals or discounts, and 47% seeking gift ideas.