As we enter the second half of the year, many Americans are questioning the stability of the U.S. economy amid fears we could be heading into a recession.

Later this month, the Federal Reserve Open Market Committee will meet to discuss the likeliness of more interest rate hikes to address the nation's highest inflation in more than 40 years.

Consumer prices in June saw the biggest 12-month increase since 1981.

Mary Daly is the president and CEO of the Federal Reserve Bank of San Francisco, and she suggests that the COVID-19 lockdowns and the war in Ukraine have both contributed in part to rising costs across the globe.

"We have a strong economy but inflation is too high," she said. "As an economist and policymaker, I was less startled. It [inflation] is something you can expect because we had a pandemic. We locked down the economy and then opened back up suddenly. We're ready as consumers to get back out there and buy things and do things, but supply chains are completely under siege."

Last month, the Federal Reserve attempted to tame rising costs by raising its key interest rate by 0.75% — its largest hike since 1994. It was the third rate hike from the central bank this year and more are expected.

But Daly said she isn't concerned that the Fed is overcooking things in order to tame down inflation.

"I'm not concerned because we put extraordinary emergency accommodation into the economy," she said. "We put a lot of support into the economy. When we did that, the economy was supported through the pandemic, and now we're just dialing back that support as we raise the interest rates through the end of the year. That should help bring inflation down to help get the economy back in balance."

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Consumers picked up their spending from May to June, underscoring their resilience despite painfully higher prices at the gas pump and in grocery aisles and allaying fears that the economy might be on the verge of a recession.

U.S. retail sales rose 1% in June, from a revised decline of 0.1 % in May, the Commerce Department said Friday.

The figures aren't adjusted for inflation and so largely reflect higher prices, particularly for gas. But they also show that consumers are still providing crucial support for the economy and spending on such discretionary items as furniture, restaurant meals and sporting goods.

SEE MORE: U.S. Inflation Reached 40-Year High Of 9.1% In June

At the same time, last month's spending gain is modest enough that it likely won't encourage the Federal Reserve to raise interest rates even more aggressively. Stock prices rose after the report's release.

Consumers still have significant savings, on average, bolstered by pandemic-era government relief checks and strong hiring and pay gains. JPMorgan executives said Thursday that their customers are still breaking out their credit and debit cards at a healthy pace.

The report showed consumers' ongoing appetite for nonessentials like gadgets and furniture. In fact, sales at furniture stores rose 1.4%, while consumer electronics stores rose 0.4%. Online sales showed a resurgence, posting a 2.2% increase. Business at restaurants was up 1%. But department stores took a hit, posting a 2.6% decline.

The solid figures bode well for the back-to-school shopping season, the second largest sales period behind the winter holidays. Mastercard SpendingPulse, which tracks spending across all payment forms including cash, forecasts that back-to-school spending will be up 7.5% from July 14 through Sept. 5 compared with the year-ago period when sales rose 11%.

But spending is volatile. The latest round of retail earnings reports published in May showed some slowing of spending, particularly with low-income shoppers. RH, an upscale furniture chain, cut its sales outlook for the year last month, pointing to deteriorating macro-economic conditions. It pointed to higher mortgage rates, which are slowing sales of luxury homes, indicating that even wealthy shoppers are pulling back.

Nevertheless, the overall solid spending came even as shoppers were confronted with high prices in all areas. U.S. inflation surged to a new four-decade high in June because of rising prices for gas, food and rent, squeezing household budgets and pressuring the Fed to raise rates aggressively — trends that raise the risk of a recession.

The retail sales report covers about a third of overall consumer spending and doesn't include services, such as haircuts, hotel stays and plane tickets.

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MILWAUKEE —

Inflation is at its highest point in decades, but there may be some hard-to-spot price hikes in the supermarket aisles, disguised from consumers by creative packaging.

Consumer advocate Edgar Dworsky said "shrinkflation," another term for product downsizing or manufacturers putting less product in a package for the same price, is more common during times of inflation.

"It really does come in waves and, unfortunately, we are in the middle of a big wave right now," said Dworsky, founder of ConsumerWorld.org.

"Prices are going up, and I think companies want to do the most to make sure it looks like they're not the ones raising their prices," Milwaukee shopper Sam Krieg observed.

Dworsky highlighted examples of shrinkflation.

"We always used to buy half-a-gallon of orange juice. Then it went down to 59 ounces. Then it went down to 52 ounces," he said.

Consumers are likely to find fewer sheets in a roll of paper towels, less pet food in a can or maybe an ounce less of cereal in a box.

"That little 1-ounce multiplied by tens of millions is big bucks in their pocket, and out of your pocket," Dworsky said.

He said other manufacturers may change the shape of their package.

"There's now an indent on the bottom of the Skippy jar that's, in essence, dead space. Gatorade came in 32-ounce bottles. They're now 28 ounces. Look for the one that kind of has a waistline on it. That's the one that's 4 ounces shorter," Dworsky said.

Sister station WISN found an example of downsizing on a Milwaukee store's shelf.

The older package for a tube of Crest 3D White toothpaste showed it contained 4.1 ounces, while the newer package listed 3.8 ounces.

Selling for the same price, the newer tube contained 7% less toothpaste.

Crest's parent company, Procter & Gamble sent a statement to WISN 12 saying in part, "P&G takes a holistic view of pricing by product category... Our focus is on delivering superior products with the best performance, ultimately delivering value to our consumers."

The best advice for shoppers may be to check the price per ounce or per unit, which is often posted in smaller print on the store shelf.

But even that may be hard to find because not all states require stores to post a unit price.

Nineteen states require some form of unit pricing, WISN reports.

Dworsky said consumers who don't routinely check unit prices may not be aware when a product has been downsized.

"Manufacturers are counting on consumers not noticing," he said.

But is it an attempt to deceive consumers?

"It certainly is a bit of package trickery, to say the least. Does it cross the line to be illegal? No," Dworsky said.

It's just a cleverly disguised hit to your household budget.

DENVER, Co. — Sean Holland has driven the same route for work every day for more than 20 years. He says it hasn't gotten boring yet.

"It's not your 9 to 5 job," Holland said. "If that's what you're looking for, this isn't it."

Holland is a UPS driver in suburban Denver. He took the job in the early '90s, and since 1995, he's been driving the same truck: Bertha.

"I've had her, next month, it will be 26 years," Holland said. "The old girl, she comes out full to the gills every day. I get rid of all that, and then we do another pickup run in the afternoon and fill it back up. There's a sense of accomplishment that goes along with that."

Holland and delivery drivers across the country were deemed essential workers at the height of the pandemic. Stay-at-home orders forced people to use delivery services at a higher rate. U.S. parcel volume went up 37% from 2019 to 2020.

UPS is hiring 100,000 seasonal workers this year to keep up with the demand as the holidays approach. But they are competing with other major companies in nearly every industry.

"We have a very robust recruiting approach," said Jeff Bloedorn, director of human resources at UPS. "We are heavily into the social media and making people aware of what UPS offers."

The company is starting some new hires at $23 an hour, with a $2,000 signing bonus. Bloedorn says there are other incentives, many of which can't be measured with dollars and cents.

"It’s a great teamwork atmosphere," Bloedorn said. "[People] like the hustle and bustle of moving all the packages... It’s a career that allows a person to take care of themselves and their family."

The pandemic has shifted a younger generation's opinion of work. A UPS survey found 9 in 10 millennials are "more open" to the types of jobs they'd accept.

But experts warn the life of a truck driver is still a difficult sell.

"I always ask my students this," said Dr. Robert Novack, a professor at Penn State University. "'How many of you would like to grow up and be a truck driver?' None of 'em."

Dr. Novack says the under-35 crowd is looking for fulfillment and purpose from a potential career. That can be tough to find from the driver's seat of a delivery truck.

"You see the rigs on the road, and as a car driver, they're an annoyance because they're big, they get in the way," Dr. Novack said. "We're working with some companies on trying to make the job of being a driver a little bit more suited to their needs. You know, treating them almost like an asset."

Holland agrees that the job can be tough.

"It's long hours, but like I said, it's rewarding," he said.

"I actually met my wife on my route out here," Holland said. "She was one of my customers for a couple years before we started dating, and ultimately got married, and now we’re married 21 years. You know, I've had dead-end jobs. And, yeah, I've been doing the same thing for almost 29 years now."

Holland smiled.

"But I love it."