(CNN) — In this Jekyll and Hyde economy, Dr. Jekyll is winning this week. (Hint. He’s the good guy.)

July’s retail sales data from the Census Bureau added to a picture emerging of an American consumer still spending even amid biting inflation and lousy sentiment. July retail sales were unchanged from June, but retail sales excluding autos and gasoline rose a healthy 0.7%.

“In one line: If you’re looking for recession, you won’t find it here,” wrote Ian Shepherdson of Pantheon Macroeconomics in a note to clients. “The July retail sales report made it clear that the U.S. consumer is rather more willing to spend than you might expect if you spend much time wallowing in the misery of the recession-obsessed media,” he said.

That recession obsession has faded a bit over the past 10 days or so amid continued signs of labor market strength, falling gas prices and hints that runaway inflation may be peaking. (The latest weekly jobless claims out this morning edged lower to 250,000, a sign the labor market is still strong.)

“Summertime and the living is easy for consumers where most are fully employed with the lowest unemployment rate in the nation’s history,” wrote economist Chris Rupkey of FWDBONDS. “They have paychecks and are still spending them, and maybe holding a little back for more cars to come to the dealer lots.”

Falling gasoline prices have allowed consumers to spend those savings elsewhere and they are spending wisely. Walmart’s CEO and others have said consumers are trading down, focusing on necessities: less steak cuts, more low-cost chicken, hot dogs and processed tuna. Many of the things they bought in the early days of the pandemic (dishwashers, couches, PJ sets) they aren’t buying now, and those things are being discounted like crazy (see Target!) which is also good for savvy consumers.

Bank CEOs have said on their earnings calls that checking accounts are still in good shape and household balance sheets are better than they were in the 2008-09 crisis.

And Goldman Sachs this week said consumers have $2.2 trillion in Covid relief still in their bank accounts, ready to deploy.

But John Leer, chief economist for Morning Consult, told me the consumer strength is uneven.

“We really do see a divergence between high income adults and middle and low income adults,” he said on CNN’s Early Start. “I think a lot of the spending growth that we’ve seen over the last year has been driven by folks making $100,000 or more per year.”

It might be why consumer sentiment surveys and polling show the public feels pretty lousy about the economy. And it’s anyone’s guess how long the mighty consumer can keep flexing their muscles. Rising interest rates will make financing a new car, home, student loan or credit card debt more expensive. The Fed is expected to keep raising interest rates to try to cool inflation, making debt even more expensive in the months ahead.

Americans are still spending, but they’re spending smart