For the first time this year, consumers have returned use as a bad situation that has been widespread since tariffs received retail data.
Total expenditures in May decreased 0.1% from last month and revenue decreased 0.4%, the business department reported Friday. Coming on the heels of the report that the first quarter GDP exceeded more than expected, data show a rapid slowing economy.
“Personal use is weak and continues to weaken,” Eugenio Aleman, chief economist in Raymond James, told Luck.
“We knew that consumers' demand had been on the weak side, but yesterday we had adjustments to the first quarter GDP, which again confirmed that the use was not powerful. Today's number just confirmed that this was not one.”
Both data for expenditure and revenue were distorted by a one -time change. Expenditure on cars plunged, providing general use, because Americans had moved quickly to buy cars in the spring to get tariffs. But the use of air, meals, and hotels all collapsed last month – users' pressure signs rather than only timely changes. The total service consumption increased only 0.1% in May, an increase of one month in four and a half years.
“Because consumers are not inadequate to handle (high prices), they spend less on entertainment, travel, hotel, that kind of thing,” Luke Tilley, chief economist at Wilmington Trust.
Retail sale also dropped dramatically last month, they received 0.9%, according to a separate report released Last week.
Revenue also dropped after a one -time reform for social security benefits to increase payments in March and April, allowing other pensioners who had worked for government and local governments to receive high social security payments.
Inflation increased with simplicity, with prices rising to the annual rate of 2.3% in May, compared to 2.1% in April. The primary price, which removes the volatile costs of food and energy, increased 2.7% from the early year, from the April 2.6% rate.
In the first three months of this year, consumer consumption increased only 0.5% and has been sluggish in the first two months of the second quarter. Many economists think of May figures showing the biggest changes to come. “The American economy is ready to slow down the warm season,” EY Economists wrote. “Users use and business investment are expected to be greatly reduced.”
In recent years, consumers have been able to continue to use more thanks to actual revenue growth and increase several government benefits. “But this two support is now very lost, and the actual image of income is about to deteriorate quickly, while tariffs lead to price,” economist in Pantheon Macroeconomics said. With low personal savings and users also skittish borrowing, “consumption can be further reduced, and soon,” they said.
Real revenue has been made clear this year, because of the weak work market but also because prices are rising, they wrote. At the same time, inflation rate – 2.7% annually – is much higher than the 2% federal goal, making it a reduction in the probability rate comes at any time soon.
“Despite the uncertainty still, the Fed will hold the reduction of that level,” financial marketing economist Oren Klachkin said.