US Consumer spending increased 0.1 percent in May, according to the Commerce Department. Spending was flat when adjusted for inflation.
According to the NY Times, “Consumer spending slowed sharply last month — good news for policymakers worried about inflation, but also a sign that a crucial engine of the economic recovery could finally be losing steam.”
April saw an increase of 0.6% and figures can vary considerably from month to month, but still serve as an insightful indicator, and this signals to forecasters that spending might still be on the decline.
Unfortunately, consistent consumer spending is the primary reason that the economy hasn’t suffered from a full-on recession. US Consumer spending has decreased across all sectors, but businesses ad retailers still report that Americans are eating out, buying cars, going on vacations, and shopping for items.
Many experts agree, however, that if these types of spending were to drastically halt or decrease further, the worse possible recession would take place. It’s a difficult balance since officials at the Federal Reserve caution that too much US consumer spending can increase demand for certain products, causing those to further rise in inflations prices. Officials would rather see a modest slowdown until inflation prices can decrease and stabilize.
