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WASHINGTON-U.S. Despite an improvement in revenues, consumers have only modestly increased their spending in May, with inflation from one year to the next showing its biggest rise for the past year. six years old.
Personal consumption spending, a measure of household spending for everything from baseball bats to coffee machines, rose 0.2% in May from the previous month, said Friday the Commerce Department.
Expectations of economists dumped for a 0.4% increase.
Personal income, reflecting pre-tax income from wages and other sources, including investment, of Americans, rose 0.4% in May, in line with economists' expectations.
Americans moderated spending in May after two months of strong growth, the 0.2% increase being the lowest since February.
April expenditure was revised to 0.5% from 0.6% previously, while March expenditure was revised to 0.6%
Consumer spending accounts for more than two third of the economic output of the United States.
Data suggests "solid rebound in consumer spending growth" in second quarter after mediocre first quarter, "but slowing trend in second half of the year"
Gregory Daco,
an economist at Oxford Economics, said in a note to customers.
The report shows that inflation is firming up. The price index of personal consumption expenditure, the Federal Reserve's preferred inflation measure, rose 0.2% in May and 2.3% from the previous year .
The index had been 2%, the goal of one year on the other side of the Fed, since March this year. The 2.3% increase in May was the largest since March 2012.
Excluding volatile food and energy costs, prices rose 0.2% in May compared with April and increased by 2% over the previous year. May was the first month in which core inflation has reached 2% since April 2012.
The Fed aims for 2% year-over-year inflation because policy makers believe this level is compatible with price stability and employment.
With an unemployment rate at a seasonally adjusted rate of 3.8% in May, its lowest in 18 years, the central bank raised its interest rates in the short term to prevent overheating of the economy. ;economy. Officials voted earlier this month to increase their federal funds benchmark rate by a quarter of a percentage point between 1.75% and 2.00%. The Ministry of Commerce said the decline in spending on services such as utilities in May was partially offset by an increase in spending on goods, including recreational goods and vehicles. Expenditure on goods increased by 0.4%. Expenditures on durable goods – expensive items such as cars and appliances – rose 0.1%, while spending on services also increased 0.1%.
The savings rate rose in May, from 3% in April to 3.2%, as incomes rose more than expenses.
Write to Harriet Torry at [email protected]
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