You can thank the American retail consumer for the soft landing

• Economists this week are embracing a higher probability that the Fed will achieve a "soft landing."
• The phrase refers to policymakers bringing down inflation without triggering a recession.

Economic forecasters have changed their tune this week after nearly two years of doom-and-gloom warnings of an all-but-inevitable downturn.

A much-hoped-for "soft landing" indeed seems increasingly likely now as inflation cools and the job market remains strong.

The term refers to policymakers' — namely the Federal Reserve — attempts to slow the economy down with higher interest rates without triggering a recession.

If the Fed proves successful, Chairman Jerome Powell (and everyone else) will owe a big "thank you" to American consumers who have largely ignored the gathering clouds and continued spending money.

Shoppers and diners spent $689.5 billion in June, per the monthly retail estimates from the Commerce Department. That's up 0.2% from the May total – and the May figure had been revised upward. US retail and food services sales were up 1.6% from April to June, following a slight decline in March.

"The consumer is still in a pretty healthy place," Bank of America Chief Financial Officer Alastair Borthwick told investors during the company's earnings call Tuesday. "The consumer is pretty resilient — that remains the case, and we're benefiting from it right now."

But that's not to say things can go on forever like this.

Households have been squeezed by rising costs that eat up more of their weekly earnings and have them tapping deeper into pandemic-era cash reserves.

"Consumers are far from depressed, but neither are they in celebratory mood," GlobalData retail analyst Neil Saunders said in a note. "People are still in the mode of being careful about what they buy and trying to stick to set budgets."

Retailers have noted a shift in spending away from big-ticket items and other more profitable categories in favor of essentials and experiences, but the bottom line is that people are still spending money — and lots of it.

As consumer spending accounts for roughly 70% of the US economy, the continued strength in that area has been key to the US outperforming every other wealthy nation in the world.

Even if the US avoids a recession, companies may need to adjust to a period of smaller profits, but that is a problem executives are more than equipped to deal with.

Most importantly for the broader economy, a soft landing means households will still have the goods and services they want and need, well-run businesses will still be making money, and workers will still have jobs.

The Fed is on the verge of accomplishing something few experts deemed probable just a few months ago, and it couldn't have happened without the remarkably resilient American consumer.