The expense of consumers Americans it rose less than expected in May as motor vehicles remained in short supply and rising prices forced cutbacks in purchases of other goods, another sign that the early second-quarter growth rebound was running out of steam.
Although Thursday’s Commerce Department report suggested that inflation likely peaked, price pressures remained strong enough for the Federal Reserve to maintain its aggressive monetary policy tightening path. However, the cooling in demand will probably be welcomed by the authorities of the US central bank.
Rising interest rates and tight financial conditions are fueling fears of a recession, but broad economic data so far point to subdued growth. The news unemployment benefit applications they continued to decline last week, despite layoffs in the technology and housing sectors, other data showed on Thursday.
“The Fed has not yet won the war on inflationbut there are somewhat encouraging signs that the economy is slowing down,” said Christopher Rupkey of FWDBONDS in New York. “Despite market recession fears, layoffs have not reached high enough levels to say that the headed off the cliff into the depths of recession.
Consumer spending, which accounts for more than two-thirds of the american economic activity, rose 0.2% last month, the smallest rise in five months. April data was revised down to show disbursements increased by 0.6% instead of the 0.9% previously reported.
Spending on goods intended to last three years or more fell 3.2%, dragged down by motor vehicles. Purchases of furniture and durable household equipment, as well as recreational goods and vehicles, also fell. This partially offset a 0.7% rise in services, driven by housing and utilities, healthcare and international travel.
Economists polled by Reuters had forecast consumer spending rising 0.4%. The report joined data on home starts, building permits and manufacturing output to suggest the economy is struggling to gain height after the Gross domestic product fell at an annualized rate of 1.6% in the first quarter.
The Commerce Department on Wednesday revised upward the pace of inventory builds in the January-March quarter, with an increase at general merchandise warehouses.
Inflation maintained its upward trend in May. The personal consumption expenditures (PCE) price index rose 0.6% last month, after gaining 0.2% in April. In the 12 months to May, the PCE index rose 6.3%, after advancing the same margin in April. This increase was due to the increase in the prices of goods and services.
However, underlying price pressures are starting to ease, although they remain strong. Excluding the volatile components of food and energy, the PCE index advanced 0.3% for the fourth consecutive month.
The core PCE index increased by 4.7% year-on-year in May, the smallest increase since last November, after improving by 4.9% in April.
Consumer spending continues to be supported by a tight labor market. Wages increased 0.5% in May, contributing to the 0.5% rise in personal income.
Although job growth is slowing, demand for labor remains strong, with 11.4 million jobs vacant at the end of April.
A separate report from work Department showed on Thursday that initial claims for state jobless benefits fell by 2,000, to a seasonally adjusted figure of 231,000, in the week ended June 25.
hartford car insurance shop car insurance best car insurance quotes best online car insurance get auto insurance quotes auto insurance quotes most affordable car insurance car insurance providers car insurance best deals best insurance quotes get car insurance online best comprehensive car insurance best cheap auto insurance auto policy switching car insurance car insurance quotes auto insurance best affordable car insurance online auto insurance quotes az auto insurance commercial auto insurance instant car insurance buy car insurance online best auto insurance companies best car insurance policy best auto insurance vehicle insurance quotes aaa insurance quote auto and home insurance quotes car insurance search best and cheapest car insurance best price car insurance best vehicle insurance aaa car insurance quote find cheap car insurance new car insurance quote auto insurance companies get car insurance quotes best cheap car insurance car insurance policy online new car insurance policy get car insurance car insurance company best cheap insurance car insurance online quote car insurance finder comprehensive insurance quote car insurance quotes near me get insurance