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US Consumer Spending Unexpectedly Declines in May, Mild Inflation Rises
Summary: According to reports from FXStreet, US consumer spending unexpectedly declined in May as the boost from pre-tariff purchases waned, while inflation remained mild. Data released on Friday showed that consumer spending, which accounts for over two-thirds of economic activity, dropped by 0.1% last month, compared to market expectations of a 0.1% increase. Following the disappearance ...
According to reports from FXStreet, US consumer spending unexpectedly declined in May as the boost from pre-tariff purchases waned, while inflation remained mild. Data released on Friday showed that consumer spending, which accounts for over two-thirds of economic activity, dropped by 0.1% last month, compared to market expectations of a 0.1% increase. Following the disappearance of the trend of early shopping, consumer spending nearly stagnated last quarter. Service spending also decreased, leading to a modest 0.5% increase in consumer spending for the quarter, the lowest since the second quarter of 2020.
This data indicates a weak growth path for consumer spending in the second quarter. The combination of weak consumer spending and mild inflation is still not enough to prompt the Federal Reserve to resume interest rate cuts in July. Economists point out that the current mild inflation is due to businesses still depleting their pre-tariff inventory, and expect inflation to pick up starting from June's CPI data.
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Link: US Consumer Spending Unexpectedly Declines in May, Mild Inflation Rises [Copy]
