Is 5% going to be enough to get people to pull money out of the stock market and decrease consumption spending?

I tend to think not.

Inflation expectations are starting to become entrenched. Buy a car and it will probably appreciate more than 5%. And small investors did poorly last year, but memories of easy money remain and I don’t think they will be satisfied with 5% per year with memories of 5% per day runs on meme stocks fresh in their heads.

Perhaps we’ll see interest rate sensitive parts of the economy get hit hard by the Fed again and again, without much effect on most of the economy.