Americans reined in their spending last month
Consumer spending powers two-thirds of economic growth; however
By Alicia Wallace, CNN
(CNN) — The US economic engine sputtered in May: Consumer spending slowed for the first time since January, according to new data released Friday that also showed inflation heated up on an annual basis.
Friday’s report from the Commerce Department showed that consumer spending fell 0.1% last month after rising 0.2% in April.
A nearly 50% drop-off in car sales was a significant driver of the May spending retreat — consumers rushed to dealerships to buy cars in March and April, fearing that President Donald Trump’s tariffs would send those costs soaring.
Friday’s report also showed that consumers also pulled back on spending at restaurants and hotels.
The Personal Consumption Expenditures price index was 2.3% for the 12 months ended in May, versus 2.2% in April. On a monthly basis, prices rose 0.1%, unchanged from April.
Economists were expecting the PCE price index to rise 0.1% from April, resulting in the annual rate ticking up to 2.3%. They expected spending to pick up slightly to 0.3%, according to FactSet.
Excluding the volatile food and energy categories, the core PCE price index rose 0.2% from April and ticked up to 2.7% on an annual basis.
This story is developing and will be updated.
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