Inflation has increased to 2.3% in May, moving above the Federal Reserve's target, indicating persistent price pressures. Core inflation also rose, revealing concerns as consumer spending fell for the first time since January, driven by a sharp drop in car purchases. This reduction in spending, alongside a significant decline in incomes, points towards cautious consumer behavior influenced by rising tariffs on goods. Despite a low unemployment rate, hiring remains weak, slowing economic growth and leading to decreased consumer sentiment.
Because consumers are not in a strong enough shape to handle those (higher prices), they are spending less on recreation, travel, hotels.
Both figures are modestly above the Federal Reserve's 2% target, indicating persistent inflationary pressures.
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