Consumer spending is an important a part of the economic system, accounting for greater than two-thirds of GDP.
The numbers for May weren’t too encouraging. Personal-consumption expenditures rose solely 0.2% in that month from April and fell 0.4% in actual (inflation-adjusted) phrases.
Retail gross sales, together with eating places and never adjusted for inflation, slid 0.3% in May.
“The drop in real personal spending in May — coupled with downward revisions to the data from January to April — means less momentum for consumption and the overall economy going into the second half of the year,” Bloomberg economists Yelena Shulyatyeva and Andrew Husby informed Bloomberg News.
“The data indicate weaker growth in services amid a general pullback in goods spending, with inflation weighing on purchasing power and sentiment at record lows.”
Bank of America Credit and Debit Card Data
Meanwhile, Bank of America credit score and debit card spending knowledge for June present a blended image. The spending rose 11% from final June, in contrast with a 9% enhance in May.
But spending per family climbed simply 3.3% in June from a 12 months earlier, trailing May’s 4% enhance. The acquire additionally lagged inflation: client costs jumped 8.6% within the 12 months by May.
“Card spending per household has been slowing since early April,” in response to the Bank of America Institute, the financial institution’s suppose tank, which assembled the info.
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“However, part of this moderation is likely due to seasonality. Spending usually peaks in March/April and slows steadily until the holiday season in a typical year.
“This seasonal effect will also be compounded this year by the fading of catchup leisure spending following a post-pandemic boost. It is difficult at this stage to be sure if this slowdown is above what we would expect to see given these crosscurrents.”
Gas, Travel and Entertainment
As for areas by which spending elevated, “gas prices continue to squeeze consumers, but spending on services such as travel and entertainment is still boosted by pent-up demand,” the B of A Institute mentioned.
On the fuel entrance, fuel spending as a share of complete card-spending per lower-income family surged to 9.8% in June from 7.7% in February.
For higher-income households (these with annual revenue of greater than $125,000), the share additionally rose — to six.1% for June.
Meanwhile, “the labor market remains supportive of consumers, and their balance sheets are in good shape,” the Bank of America Institute mentioned.
So the place is the patron sector headed from right here? Hard to know.
“The post-summer outlook for consumer spending is unclear, particularly as services spending is still being temporarily boosted by pent-up demand since covid restrictions were eased,” the Institute mentioned.
Source: www.thestreet.com”