American consumers are increasingly propping up the global economy, an enduring source of strength that is helping keep the United States out of recession and drawing a sharp contrast with the rest of the world.
But as a number of signs point to a possible downturn in the United States, economists are growing more skeptical that consumers will continue to open up their wallets as freely. A failure to do so could hasten the arrival of the first US recession in a decade.
Low unemployment, rising wages and easy credit have given consumers the confidence and ability to spend in recent months. That has proved crucial as spending by US businesses has declined, US manufacturing has fallen into a funk, and the economies of many other large countries, including Germany, have begun to shrink.
The strength of the consumer has convinced many business leaders that the US economy won't go into recession anytime soon, and it is the basis for optimism at the White House that it will remain strong into the 2020 election.
"Probably above all else, the consumer is doing incredibly," President Donald Trump said Thursday.
Yet a number of developments could shift this view.
The US stock market, which saw its largest one-day decline of the year Wednesday, has proved highly volatile as Trump's trade war with China has escalated.
Bond markets, which have a strong track record of predicting recessions, are flashing warning signs. And the trade war itself, which for the most part hasn't hit consumers directly, will begin to do so more forcefully in the fall as tariffs rise on consumer staples, including some food and clothing products.
"The consumer is playing Atlas, shouldering the economy," said Diane Swonk, chief economist at the accounting firm Grant Thornton. "But there's an underlying fragility here. Businesses have already been scared into pulling back, and now consumers are also walking on eggshells."
No single bit of negative news is likely to dramatically change the outlook of consumers, whose spending drives about 70 per cent of the US economy. But collectively - and combined with other financial anxieties - they could prompt a cycle of fear that leads consumers to pull back. That's especially true for the tens of millions of Americans who have painful memories of the Great Recession, which lasted from December 2007 through June 2009.
One of the most reliable warning signs arrived Friday, when the University of Michigan's consumer confidence index fell to a seven-month low, and the index measuring Americans' outlook for the future dropped even further.
It was "the first indication that the US consumer might not save the world economy after all," Paul Ashworth, chief US economist for Capital Economics, wrote in a note to clients.
Trump last week delayed a new 10 per cent tariff on a large chunk of US$300 billion worth of Chinese exports that had been scheduled to go into effect in September. Trump said he didn't want to undermine the holiday shopping period, so he pushed about half the tariffs back to mid-December.
But economists warn that the tariffs that remain will have an outsize impact on consumers. Previous rounds of tariffs mainly affected industrial products and raw materials such as steel.
"The tariffs that are going into effect next month are not insignificant," Swonk said. "We're talking about a lot of basics that people buy at the grocery store - garlic, pine nuts, meats, dairy - that all come from China."
Other challenges are also on the horizon. Historically, consumers have been spooked by a falling stock market and a decline in hiring. The job market has been red hot, but there are signs of a hiring slowdown. And growth in paychecks, which had been robust last year and early this year, is slowing as well.
Also, the boost from Trump's tax cuts may be fading. The tax cut law passed at the end of 2017 added hundreds of dollars to many middle-class families' take-home pay last year, according to the Tax Policy Center. But economists say the effects of the tax cut were strongest then, and the stimulus diminishes as Americans adjust to the new norm.
"The bottom line is the effects of the tax cut are fading," said Torsten Slok, chief economist at Deutsche Bank Securities.
"We're getting more worried about the US outlook."
Consumer spending could also prove fragile since so much of it is reliant on debt. American households have again taken on large debt loads to fuel consumption, with consumer debt hitting $13.9 trillion in the spring, more than a trillion dollars above the prior peak, reached just before the 2008 financial crisis.
The cloud of uncertainty has some consumers questioning when they should start making changes, and to what degree. The possibility of another downturn has some shoppers starting to trim pricier items from their grocery lists or doubting future job prospects.
By most measures, Andrea Maxand says she feels financially secure. She has a good job, has paid off her credit card debt, and is making more money than she did a year ago.
But over the past few weeks, she has started pulling back in small ways. She has brought down her weekly grocery bill from $160 to $110, and is cutting down on "the frivolous things": takeout, delivery, weekend trips to see her favorite bands.
"My situation right now is good," said Maxand, who works as a paralegal in Seattle while studying for a graduate degree in history. "But I'm anxious. I've been watching the rumblings of the trade war. This week, when the stock market tumbled, I said, yup, it's time to start budgeting."
A growing sense of anxiety around a potential recession is enough to unsettle consumers, said Mark Cohen, director of retail studies at Columbia University's business school.
People may grow concerned that they'll lose their jobs, or that they won't get the raises they expected. Businesses affected by the trade war will be "faced with a series of really suboptimal decisions," Cohen said, that could include passing the cost of the tariffs on to consumers.
And if shoppers are hit with an uptick in prices - say $10 more at the grocery store checkout - people will start to scale back, particularly those who are struggling paycheck to paycheck, or nearly so.
"If it's abrupt or somewhat precipitous, people will freak out in the consumer space, which happens to be everyone with a heartbeat," Cohen said. "And what does that do? It dampens demand."
Margaret Williford has one year left toward her master's degree in public policy and will soon be on the job hunt. She plans to scout for openings at nonprofit organizations advocating for women who have been victims of violence, and has been thinking primarily about going to a large city that may come with pricier rent.
But Williford, like many of her fellow graduate students, is starting to wonder whether she'll be entering the workforce at the start of a recession. She worries that as others consider tightening their wallets, she'll be entering a field dependent on charitable giving.
"Women don't stop being abused just because there's a recession," Williford, 23, said. "If there's a recession, there's no giving, and nonprofits are not going to have money to do their work, let alone to hire new people."
When she thinks about that word - "recession" - Williford says she thinks back to the Great Recession. She was in middle school then and watched as her mother, a teacher, lost her job because of budget cuts at her school, even though she ended up landing on her feet.
Williford considered taking out loans this year to "have some more wiggle room." Instead, she's thinking about where to start saving.
"So many of my friends are graduating with debt and are going to be trying to find a job," Williford said. "It's just one thing on top of the other."
How Americans feel about the economy is driven partly by their feelings about Trump. Republicans routinely say this is the best economy since the 1990s boom, but Democrats do not, a split that could become more pronounced as the trade war escalates.