Consumers' spending decisions are influenced by their expectations of inflation and interest rates. People tend to adjust their current spending based on their future spending plans, supporting the idea of smoothing out consumption over time. Financially savvy individuals and those with higher incomes are better at managing their spending to account for changes in interest rates. News about inflation and monetary policy can also impact how much people spend. Overall, people's spending habits are affected by their financial knowledge, income level, and the information they receive about the economy.