ORLANDO, Florida, Aug 18 (Reuters) - U.S. consumer

spending's surprising resilience is the main reason the economy

has not only avoided recession, but continued to grow at a solid

clip. The big question now is whether American households can

keep that going, especially with higher, tariff-fueled prices

coming down the pike.

In the U.S., "the consumer" is king. Consumer spending

accounts for around 70% of total economic output, so changes in

people's propensity to spend have a direct, outsized influence

on the health of the economy.

But "the consumer" is, of course, actually millions of

people. And when you split them into groups based on income and

wealth, it becomes clear that total spending disproportionately

comes from the rich.

Mark Zandi, chief economist at Moody's Analytics, said

earlier this year that the richest 10% of Americans, those

earning at least $250,000 a year, now account for half of all

consumer spending. That's a record. Thirty years ago, the

richest 10% accounted for 36% of all consumer spending.

A Boston Fed paper last week backed up Zandi's findings,

concluding that the strength of aggregate consumer spending in

the last three years is due to high-income earners. But the

authors suggest high-income consumers have a reasonable cushion

because they haven't maxed out their credit cards.

While the lower-income and middle-income cohorts both saw

their credit card debt soar past pre-pandemic totals in the last

few years, wealthier Americans' credit card debt remains below

the 2019 high and well below the level implied by the

pre-pandemic trend. So, if necessary, they still have room to

borrow to fund their spending.

EARNING POWER

Spending across the income deciles could also be supported

by enhanced earning power.

While some indicators show that the U.S. labor market may be

softening, annual average earnings growth still rose in July to

3.9%, meaning real wage growth is running at a 1.3% annual pace,

depending on what slice of inflation you use. Real annual wage

growth has been between 1.0% and 1.8% for over two years, above

the average for the decade leading into the COVID-19 health

crisis.

And overall workers' income may be growing at an even faster

rate, according to economists at Bank of America. They calculate

that aggregate labor income - number of jobs multiplied by wages

multiplied by number of hours worked - increased 5.5% in July on

a six-month annualized basis. Most of that growth was driven by

higher wages.

With household delinquency rates, excluding student loans,

cooling off this year, strength in labor income should continue

to support consumer spending, they argue. This, in turn, should

help the U.S. avoid the recessionary spiral of lower spending

begetting layoffs, begetting even lower spending, begetting more

job cuts.

This is one of the reasons BofA economists retain their

out-of-consensus call that the Federal Reserve won't cut

interest rates at all this year.

FLASHING AMBER?

Others are less confident.

Zandi at Moody's Analytics warns that a correction on Wall

Street would hit the rich hard via the negative wealth effects,

"and, given how weak the economy is, push it into recession."

The concentration of equity ownership at the top of the U.S.

wealth ladder is extreme - the richest 1% in the country owns

50% of stock market assets and the top 10% holds around 90%.

Some measures of household spending are already flashing

amber. Inflation-adjusted spending as measured by personal

consumption expenditures flatlined in the first half of this

year.

Yet figures on Friday showed that retail sales rose 0.5% in

July after an upwardly revised 0.9% gain in June.

But then there are tariffs. Companies, not consumers, have

borne the brunt of these levies so far. Economists at Goldman

Sachs estimate that consumers absorbed only 22% of tariff costs

through June, but they reckon that figure could rise to 67% in

the months ahead if the Trump administration's expected tariffs

are implemented.

So there are grounds for both caution and optimism. Much

will depend on whether the rich draw in their horns.

(The opinions expressed here are those of the author, a

columnist for Reuters)

(By Jamie McGeever

Editing by Paul Simao)