The writing was on the wall. Shoppers are cautious with their spending this holiday season, but those predictions turned out to be far from reality.
Richard Wobbekind, a senior economist with the University of Colorado Boulder, said indulgence of spending is what's preventing a recession.
"The numbers that have come out in retail sales and holiday sales have really exceeded expectations," Wobbekind said.
"We're anticipating a slow down in the economy, somewhat significantly in 2023, it's in our forecast, and that is really going to be driven by consumers slowing down their spending at some point. So without the consumer spending at this level, you really can't envision the economy staying out of a sort of extremely slow or recessionary environment," he said.
The National Retail Federation says a record 196 million Americans shopped in stores and online over the thanksgiving holiday weekend. That is a 10% increase from last year.
Consumers also spent a total of $11.3 billion on Cyber Monday, which set a new annual sales record.
Professor of economics, Christina Huber with Metropolitan State University of Denver, says it will be telling to see how the December numbers shape up.
"It could be the case that consumers still spent a lot on Black Friday and the weekend after thanksgiving because with inflation they are really looking at those deals," Huber said.
The current economic reality is confusing. A pandemic in our rearview mirror, major supply chain issues and excess savings from stimulus checks and rebates.
"It disrupts the models completely because you don't normally have that level of stimulus that we saw, you don't normally have zero interest rates for such a long period of time so when you put those things together the fiscal and the monetary stimulus makes it very difficult to interpret what's the next thing that's going to happen," Wobbekind said.
"On the positive side the end of 2022 we've recovered all the employment we've lost in the COVID pandemic and that's not a normal thing either. We've also started to see wages rising. So there are some positive things out there but we're also seeing inflation that we haven't seen in 40 years," he said.
"On the one hand we have a housing market that's in recession, on the other hand we have this labor market that's very hot, and then another hand we have the federal reserve raising interest rates to try to bring down inflation because inflation has skyrocketed. So we have all of these economic indicators that are going in very different directions and that's very unusual," Huber said.
Experts say exuberant spending can usually be a major driver of the economy and push off a recession, but when the federal reserve is actively trying to squash high inflation rates, the risk becomes high. There is more inflationary pressure and demand pressure on the economy.
The federal reserve is currently working to increase interest rates. The goal is to do it slowly enough not to plunge into a recession, which is referred to as a soft landing. These experts say if the last few years have taught us anything it's how unpredictable the economy can be and how often it changes.