'YOLO' consumers are driving what could be one of the last good stretches for the economy, Wharton's Jeremy Siegel says

• Economic resilience is largely due to higher summer spending, Wharton Professor Jeremy Siegel wrote.
• But the Fed should not lift rates due to this, as consumer activity could fall in September or October.
• "It is the 'YOLO' (you only live once) consumer out traveling and enjoying the summer."

The economy appears robust despite higher interest rates, as the summer has brought out a certain class of spenders, Jeremy Siegel said on Monday.

"The economy looks like it is progressing smoothly, with a resilient consumer impervious to the impact of higher borrowing costs. It is the 'YOLO' (you only live once) consumer out traveling and enjoying the summer," the Wharton professor wrote in his weekly WisdomTree commentary.

But he warned that this isn't meant to last, and could be one of the final stretches of strength in the economy. Eventually, the summer ends and school is back in session, while consumers face credit card payments and markets face the historically "dicey periods" of September to October, Siegel said.

As the summer represents a temporary uptick in spending, he added that the Federal Reserve should hold back on further increases to interest rates, rather than basing future action on signs of economic resilience. 

Friday's jobs report, for example, included higher-than-expected wage gains that back up the view of hawks on the Fed. But he noted the outlook can change quickly.

"The Fed needs to only look back at its own experience calling inflation transitory to see how long it could take for inflation to turn around—and once a weakening in the economy kicks in, it could come fast," he wrote.

Siegel he has repeatedly criticized the Fed's continued hawkishness in light of a falling inflation rate. And Wednesday's consumer price index report is expected to provide a fresh sign of the slowdown.

Meanwhile, markets are likely headed for somewhat of a stalemate, with Siegel predicting the second half of 2023 will not be great but not that bad.

"There will be a battle in the market dynamics between recession fears and a slowdown, with thoughts the Fed will respond by bringing in more accommodation and lowering rates," he wrote.