Come next year, the economy will be facing higher interest rates, slowing labor demand and a greater distance from the massive fiscal support seen in the pandemic, she said.

For now, “consumers are still generally upbeat,” House said. “Nobody likes this inflation backdrop, but it’s not necessarily deterring a lot of consumers from spending, particularly when their job prospects are so good right now.”

Companies in industries ranging from technology to household goods to luxury retail have echoed that sentiment, noting that customers are still buying despite higher prices.

L’Oreal SA CEO Nicolas Hieronimus said on April 19 that “the growth trend continued in the global beauty market” in the first quarter, “with consumer purchasing behavior unaffected by inflation.”

Kimberly-Clark Corp. CEO Michael Hsu said on April 22 that the company’s price strategy is “very effective right now” and that volumes are trending better than the company initially expected.

More Complaining
“Part of the inflation story is how the consumers handle it and are we going to see consumption get cut off, or will consumers just push through the higher prices and continue to consume?” said Chris Gaffney, president of world markets at TIAA Bank. “So far, it looks like consumers are shrugging off the price increases, but everybody is complaining about it.”

Businesses may also benefit from an expected normalization of supply chains later this year, which will better position companies to meet demand.

“While the current environment remains difficult to predict, I expect that as 2022 progresses, we will begin to experience an easing in supply chain disruptions, general inventory rebuilding across many end-use markets and still a healthy consumer willing to spend, especially in North America,” said Michael McGarry, CEO of paint maker PPG Industries Inc.

Overall, first-quarter earnings are beating estimates by 7%, with roughly 75% of S&P 500 firms topping projections, according to data compiled by Credit Suisse. Assuming the current beat rate, profits are on pace to grow 12% versus the same period last year.

“The forward guidance is trying to make sense of where we are, which is really hard to do right now, and where we’re headed, so they’re cautious about forward guidance,” Gaffney of TIAA said. “But at the same time, this economy is rolling along, we’re still expanding, so company earnings are coming in fairly well.”