>Scenario 2 is an interesting prospect and is exactly what the inflation doomers have been shouting - that every previous period of inflation has had periods of cooling followed by even more rapid inflation. The gas prices might signal a resurgence here, but my personal experience (and the data) suggest that inflation in the price of goods is just about done.

This is called the "Whipsaw Effect." It's an expected part of the inflationary prediction. The periods of inflation are also getting shorter and less relatively impactful. It just feels like it hurts more because years of inflation are compounding and we have headlines like the price of eggs to look at... but as the order and contract system catch up and cycles emerge, it'll get easier to ride the inflation waves for companies and that means better margins.

Edit: I do agree that in the nearterm, there's a risk of an earnings recession, mostly agreeing with the dynamics u/acneadjr has laid out... but I would only say that the market may surprise us if things aren't as much of a downward spiral as they're suggesting.

I think looking at consumer patterns is the right place to look overall... I just don't know that it necessarily correlates with a market decline or that it necessarily cyclically builds to the extent it appears it could.