Inflation is at historic highs in the United States, and it's eating into consumer spending power.

US consumer prices surged to a new pandemic-era peak in June, jumping by 9.1% year-over-year, according to the most recent data from the Bureau of Labor Statistics. That's higher than the previous reading, when prices rose by 8.6% for the year ending in May.

Accordingly, money is tight in many US households: New data from the Bureau of Economic Analysis shows Americans are saving much less than they did a year ago. In May, Americans saved just 5.4% of disposable personal income, down from 12.4% year-over-year.

To counter white-hot inflation, the Federal Reserve has approved a series of supersized interest rate hikes this year. Higher rates keep prices in check by slowing the economy down. But the Fed is walking a narrow line. In the 11 times the Fed raised rates, the Fed has successfully avoided recession only three times. During each of those cycles, inflation was lower than it is today. That has made some analysts and market participants nervous about a potential recession.