In May, consumer spending and incomes slipped, marking the first decline this year, as reported by the Commerce Department. Spending decreased by 0.1%, with incomes dropping 0.4%, reflecting the impact of tariffs on retail activity. Economic analysts warn of a looming 'summer slowdown' as inflation increases. Notably, spending on cars decreased significantly as consumers anticipated higher costs, while expenditures on services rose minimally, showcasing deeper consumer pressure. Retail sales also fell sharply, indicating broader economic challenges.
Overall spending in May fell 0.1% from the prior month and incomes fell 0.4%, the Commerce Department reported Friday. Coming on the heels of a report that first-quarter GDP shrank more than expected, the data show a rapidly downshifting economy.
Because consumers are not in a strong enough shape to handle those (higher prices), they are spending less on recreation, travel, hotels, that type of thing.
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