The Interest Rate Conundrum: How Small Increases Can Have Big Effects on Consumer Spending When interest rates rise, even slightly, it is often assumed that the impact on consumer spending will be negligible.
However, this perspective overlooks the intricate web of relationships between interest rates, credit availability, and consumer behavior.
Understanding the Relationship Between Interest Rates and Consumer Spending The connection between interest rates and consumer spending is rooted in fundamental economics: when borrowing becomes more expensive, people tend to borrow less.