Consumer spending growth slows in May, as higher prices weigh on the economy
Source: Washington Post
ECONOMY
Consumer spending growth slows in May, as higher prices weigh on the economy
The good news is that we still have savings, but the bad news is that inflation is burning a hole in consumers pockets, one economist said
By Abha Bhattarai
June 30, 2022 at 8:43 a.m. EDT
Americans are still spending, but at a slower pace than a few months ago, a sign that the biggest part of the U.S. economy is beginning to moderate
Overall consumer spending rose by 0.2 percent in May, down from 0.9 percent growth a month earlier, the Bureau of Economic Analysis (BEA) said Thursday. The report also showed that one measure of inflation remained steady, with overall prices up 6.3 percent in the last year.
Consumer spending has so far been a bright spot in the U.S. economy, even as inflation hits 40-year highs. Although Americans say theyve lost confidence in the economy consumer sentiment measures have plunged to record lows they have so far continued to pay for goods and services. But economists say there are signs that is beginning to change, as higher interest rates and slowing savings rate take a toll on families budgets.
The good news is that we still have savings, but the bad news is that inflation is burning a hole in consumers pockets, said Diane Swonk, chief economist at Grant Thornton. This is a hard time for consumers, and were starting to see inflation eating into some forms of spending.
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By Abha Bhattarai
Abha Bhattarai is the economics correspondent for The Washington Post. She previously covered retail for the publication. Twitter https://twitter.com/abhabhattarai
Read more: https://www.washingtonpost.com/business/2022/06/30/consumer-spending-economy/
mahatmakanejeeves
(57,413 posts)Jun. 30, 2022 8:33 AM ET | By: Liz Kiesche, SA News Editor
May Personal Income and Outlays: +0.5% M/M vs. +0.5% expected and +0.5% prior (revised from +0.4%).
Personal spending: +0.2% M/M vs. +0.5% expected and +0.6% prior (revised from +0.9%).
PCE Price Index: +0.6% M/M vs. +0.7% expected and +0.2% prior.
+6.3% Y/Y vs. +6.5% expected and +6.3% prior.
Core PCE Price Index: +0.3% M/M vs. +0.4% expected and +0.3% prior.
+4.7% Y/Y vs. +4.8% expected and +4.9% prior.
Real disposable income fell 0.1% in May from April. Meanwhile, real personal consumption expenditures decreased 0.4%, with goods down 1.6% and services up 0.3%. This underscores the shift in consumer spending to services and away from goods.
Within services, increases were led by housing and utilities (mostly housing), "other services" (specifically international travel), and healthcare (led by hospitals).
Another good sign is that personal saving increased to $1.01T in May, up from $948.0B in April, and the personal saving rate was 5.4%, up from 5.2% in the previous month.
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progree
(10,901 posts)"real" meaning inflation-adjusted.
https://finance.yahoo.com/news/stock-market-news-live-updates-june-30-22-115133813.html
However, separate data showed real personal spending fell by a larger-than-expected 0.4% in May after a rise of 0.7% in April, suggesting consumers were pulling back on some spending with inflation at current levels.
Amid the myriad concerns facing markets as of late, stocks are on track to close out the worst first half of a year in decades. Based on Wednesday's closing prices, the S&P 500 is set to post a 19.9% decline for the first six months of the year its worst performance since 1970. For the month of June alone, the index is on track to slide by 7.6%.
As of Thursday's ((whoops, Wednesday's)) close, the Dow had fallen 14.6% for the first half of the year, and the Nasdaq shed nearly 29%.
Emphasis is Progree's. Things in double parenthesis ((...)) are Progree's
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