U.S. Consumer Spending Sees Unexpected Drop in May, While Inflation Edges Up Moderately

BlockBeats News, June 27: U.S. consumer spending unexpectedly dropped in May as the boost from pre-tariff purchases waned and inflation remained moderate. Friday's data showed that consumer spending, which accounts for more than two-thirds of economic activity, fell 0.1% last month, compared to market expectations of a 0.1% growth. After the frenzy of early shopping faded, consumer spending nearly stalled last quarter. Service spending also declined, leading to a modest 0.5% increase in consumer spending for the quarter, the lowest since the second quarter of 2020.

This data suggests a soft growth path for consumer spending in the second quarter. The combination of weak consumer spending and moderate inflation is still not enough to prompt the Fed to resume rate cuts in July. Economists point out that the current mild inflation is due to businesses still depleting the inventories they built up before the tariffs took effect, and they expect inflation to pick up starting from the June CPI data. (FX Street)