As the Federal Reserve continues its historic fight against inflation, the US economy is widely expected to slow in the coming months after a remarkable summer of robust consumer spending and financial-market resilience.

According to investors and economists, consumer spending will not deteriorate too much, which should help stocks avoid a massive sell-off this year. There are, however, no guarantees when it comes to returns, either.

“We expect the labor market to soften a bit over the next few months, and credit card balances and delinquencies have both increased, so that may lead to softer consumer spending,” Matthew Palazzolo, senior investment strategist at Bernstein Private Wealth Management, said. However, we don’t expect a significant recession. There is no doubt that the economy will soften.”

Until we get a better sense of what 2024 will look like, Palazzolo said, “markets will move sideways the rest of the year.”

Stocks have soared this year, mostly due to chipmaker Nvidia and the hype around artificial intelligence, although shares have slumped in August. It is traditionally a bad month for equities as investors leave for vacation.

As student loan payments resume in October, Americans may cut back on their spending due to the economic headwind.

Student loan repayments will ultimately have a significant impact on spending, but how much is still unclear. A new income-based repayment plan is being rolled out by the Biden administration in an attempt to soften the blow. 44 million Americans with student loans make an average monthly payment of $210 to $314, according to Wells Fargo.

Another key uncertainty on the minds of both Fed officials and investors is that the economy is still contending with the central bank’s most aggressive inflation-busting campaign in decades. Research shows it could take at least a year for the effects of rate hikes to trickle through to the broader economy.