Consumer spending was withdrawn again in May with high inflation – a double noise of bad news

The total spending in May decreased by 0.1 % from the previous month and the income decreased by 0.4 %, the Trade Department I mentioned Friday. Following a report that the gross domestic product in the first quarter has shrunk more than expected, data shows a rapid economy to decrease.

Eugenio Oman, chief economist in Raymond James said luck.

“We knew that the request of consumers was on the weak side, but yesterday we had a review of the gross domestic product in the first quarter, which confirmed again that consumption was not strong. Today’s number confirmed that this was not one time.”

Both spending and income numbers have been distorted through one time changes. The spending has decreased on cars, and public spending is down, because the Americans have moved more quickly to buy vehicles in the spring to apply for definitions. But spending on flights, meals and hotels all decreased last month – as it concerns the basic consumer pressure rather than just timing transformations. Service spending generally increased by only 0.1 % in May, which is the lowest increase in one month in four and a half years.

“Since consumers are not in a strong condition enough to deal with these (higher prices), they spend less on entertainment, travel and hotels, this type of things,” said Luke Telly, the chief economist in Wellington Trust.

The retail sales decreased sharply in the past month, as the contract was held by 0.9 %, according to a separate report issued Last week.

The income also decreased after a single amendment to social security benefits, strengthening payments in March and April, allowing some retirees who worked in government governments and local governments to obtain higher social security payments.

The inflation increased modestly, with prices increased by an annual rate by 2.3 % in May, compared to 2.1 % in April. The basic prices, which exclude the costs of food and volatile energy, increased by 2.7 % from the previous year, increasing from a rate of 2.6 % in April.

In the first three months of this year, consumer spending increased by only 0.5 % and was slow in the first two months of the second quarter. Most economists believe that Mai characters indicate a dramatic decrease. “The American economy is preparing for the slow summer,” Ey Economists wrote. “It is expected that both consumer spending and business investment will greatly.”

In recent years, consumers have been able to continue spending thanks to the growth of real income and the increase in some government benefits. “But these two support are often faded, and the real image of income is about to deteriorate quickly, as the definitions increase from prices,” said economist in Pantheon, the macroeconomic. As personal savings and consumers are very volatile for borrowing, consumption is likely to slow down much, and soon. ”

And they wrote the true income of flatness this year, partly due to a weaker labor market but also because the prices rise. At the same time, the inflation rate – 2.7 % annually – is much higher than the Federal Reserve goal by 2 %, which makes it unlikely to exceed prices anytime soon.

“With many cases of uncertainty, the Federal Reserve will stop the price cuts at the present time,” said Orne Klatkin’s economic economist in the country.