U.S. Consumer Spending Dips Amid Tariff Effects: Economic Uncertainty Lingers
Consumer spending in the U.S. fell in May due to pre-emptive purchasing ahead of tariffs. The Commerce Department reports no immediate impact on monetary policy, but forecasts suggest possible inflation hikes. While stock markets gain, economic sentiment remains cautious amidst tariff-induced volatilities and fluctuating trade dynamics.
U.S. consumer spending saw an unexpected decline in May as the heightened purchasing of goods, such as motor vehicles before tariff impositions, slowed down its impact. This decline in spending, reported by the Commerce Department, leaves little room for immediate monetary policy changes, according to Federal Reserve Chair Jerome Powell.
Tariffs have led to increased frontloading of imports, creating a blurred economic picture with prices potentially rising in the summer. Despite dipping consumer expenditures, Wall Street showed gains, influenced by expectations of further Federal Reserve rate cuts. Meanwhile, consumer sentiment remains tentative amid slow economic growth indicators.
Economic analysts observe that the trade deficit could see a rebound, leading to GDP growth in the upcoming quarter. However, persistent tariff-related distortions continue to complicate economic forecasts. While overall wage increases provide some relief, personal incomes fell slightly, signaling cautious consumer behavior moving forward.
(With inputs from agencies.)
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