The U.S. economy grew at an annual rate of 2.9% in the fourth quarter

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Resilience is a good thing in many ways, but it’s also something that makes things harder for the Federal Reserve and strengthens its resolve, said Diane Swonk, chief economist at KPMG, the accounting firm.

Understand inflation and how it affects you

Some clues suggest that consumers could finally reach their limits. Americans have been saving less and using their credit cards more in recent months as pandemic-era savings dry up. Retail sales have fallen for two consecutive months, and a strong fourth-quarter inventory accumulation suggests that many businesses may have sold less than expected over the holiday season.

You can start to see the cracks here, said Brett Ryan, senior economist at Deutsche Bank.

In some corners of the economy, these cracks are more like cracks. Housing, in particular, has been hurt by rapidly rising interest rates. Residential construction activity contracted at an annual rate of 26.7% in the fourth quarter, capping its worst year since the subprime crisis 15 years ago. It was a stark reversal from the start of the pandemic, when homebuilding was booming.

It was such an abrupt thing that I think that’s what made everyone’s head spin, said Gene Myers, president of Thrive Home Builders in Denver. I think there is a kind of whiplash.

Mr. Myers expected to complete the sale of around 150 homes last year. He ended up closing 83. Our demand just dried up, he said.

So in November, Mr. Myers took action, laying off workers, negotiating lower prices with contractors and reducing house prices by about 15%. There are signs the strategy has worked: Thrive has sold eight homes so far this year, which Myers sees as a sign that buyers are holding out for the right price, without giving up property altogether.

I feel like people are going to wake up after the holidays and say, the sky hasn’t fallen, I’m still working and I’m sick of renting. Let’s take a look, he said.

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