U.S. consumers appear to be saying one thing and doing another.

Gloomy sentiment surveys suggest consumers should be pulling back on purchases. However, reported retail sales show that consumers are spending freely.

Consumer sentiment usually turns pessimistic at times of elevated inflation. And dramatic shifts in sentiment are usually a precursor to economic contractions. For this and other reasons, CBRE Econometric Advisors believes a recession is likely within the next few quarters.

On the bright side, consumer expectations for future inflation have eased, a view bolstered by lower gasoline prices. In addition, June retail sales were stronger than expected. But headwinds are looming; consumers have largely spent down excess savings, borrowing costs are up and the labor market may soften. All this means weaker sentiment will likely translate into reduced discretionary spending.