oil was over $100/bbl from roughly 2010 through 2014 but the economy kept on going just fine.
if people have jobs and have some discretionary income they can ride out the pain of higher prices through deferring spending. the middle class certainly can do this. its the people who are quite literally paycheck to paycheck who fall behind and wind up making poor choices like payday loans who are really going to be feeling substantial pain right now.
and i don't want to sound like i'm entirely discounting that, but crank unemployment up to 10% and it is going to be those people who wind up even worse off and possibly unemployed and homeless. it can get a whole lot worse for everyone right now.
and yeah, the already comfortable people still feel pretty comfortable at this point and aren't feeling a lot of pain, other than maybe the family has to stick with old iphones this year or something. the economy is objectively much worse when those people are losing their jobs and houses than when they're not. which does not deny the existence of people at the margins of the current economy that are being more severely hurt by prices.
Depending on what stat you look at, the % of people living paycheck to paycheck is actually pretty large, and only getting larger as prices go up, especially in rent/homeownership space.
But...the labor market is showing some great resiliency, so if that initial domino never falls, we might be able to skirt through with minimal damage by keeping confidence high.
The third sentence I think is wildly optimistic. The whole problem is the overhang of jobs and the labor market. What they're really worried about is baristas being able to job hop to find better wages just like SWEs have been able to. The Fed have openly talked about this, the business pages talk about it openly and Musk and Zuckerberg are both almost cheerleading the effort to start punishing workers that they think have had it too good lately.
And that is just going to take economic pain and negative employment numbers. And all the talk of a soft landing for the past few weeks is the same language that was used in 2007. They don't actually have any kind of surgical ways to cool off the economy, what winds up is that they crash it. When they do the proverbial "tides goes out and we see who has been swimming naked" -- which means that structural issues in residential and commercial real estate will be exposed. We never really regulated the banks with any teeth in 2008, so we can assume that people out there are making stupid bets on the economy again which are going to go against them (the 2008 crisis actually proves that the people making those stupid bets will not suffer any personal consequences, so it's reasonable to assume that will happen again).
The Fed will have to continue to raise rates until the labor market fails. At that point shit should get very interesting.
I don't see any areas of the economy where there will be wide spread layoffs besides crypto markets and even then, those people will be swallowed up elsehwere.