>will have to forego some spending, thus reducing demand for some goods/services Or they will increase costs; which is (1) people (labor) demanding higher wage

>will have to forego some spending, thus reducing demand for some goods/services Or they will increase costs; which is (1) people (labor) demanding higher wages or (2) business increasing the costs of good to cover rent costs. Given that rent is already the biggest cost and has been growing steadily, it may be the case the other spending areas have been dialed to a minimum already.