Zhitong Finance APP learned that the latest data released by the U.S. Department of Commerce on Thursday showed that the price-adjusted commodity and service spending level (actual personal consumption expenditure) in May was revised down to a month-on-month decrease of 0.4%, and a month ago, the data (April data) was slightly increased by 0.3%. Data shows that service spending is rising, while commodity spending is down sharply. In terms of the latest inflation data, the US personal consumption expenditure price index (PCE price index) in May rose 0.6% from the previous month, with market expectations of 0.7%; up 6.3% from May 2021, with market expectations of 6.4%.
data shows that the Fed's favorite indicator to measure inflation, the core PCE price index, rose 0.3% month-on-month, also lower than market expectations (0.4%). The index rose 4.7% from the same period last year, its smallest gain since November last year. The data for May appear to indicate that the core PCE index under the year-on-year standard has not deteriorated further and has been on an optimistic trend for several consecutive months.
Beware! The core of the US economy - consumption expenditure is gradually weakening
Without considering inflation factors, the US personal consumption expenditure increased by 0.2% in May compared with the previous month (the lowest increase this year), but the market expects a month-on-month increase of 0.4% and the previous value was 0.6%. Personal income increased by 0.5% month-on-month. However, actual price-adjusted personal consumption expenditure in May was revised down to a month-on-month decline of 0.4%.
, the slowdown in consumer spending, as the main driving force of the U.S. economy, has exacerbated market concerns about the growing outlook for the U.S. economy. The U.S. consumer confidence index released last week is at an all-time low, which is enough to show that consumer concerns about the recession are increasing. Although the labor market is strong, it also shows some early signs of weakness. For example, the number of initial unemployment claims (10,000) to the week of June 25 was 23.1, higher than the market's generally expected 22.8.
Even so, the actual personal consumption expenditure data still reflects the elasticity of consumers' demand for the service industry, highlighting the long-awaited consumer preferences shift from goods to services. The latest data shows that inflation-adjusted commodity spending fell 1.6% month-on-month in May, the biggest drop since the year, while service spending rose 0.3%. According to the Ministry of Commerce, a decline in motor vehicle spending has led to weak commodity spending.
It is obvious that the inflation rate that has set new highs is eroding Americans' income and consumption levels, and households generally face heavy pressure on price increases, including gasoline prices close to the highest level in history. Earlier this month, the Fed's rate hike reached its highest level since 1994. At the July meeting, the Federal Reserve will also decide whether to raise interest rates by 75 basis points again or choose to raise interest rates by 50 basis points based on the latest data from July.
On Wednesday, Federal Reserve Chairman Powell had made it clear that he and his colleagues "hopefully economic growth will remain positive", noting that the U.S. economy is ready to bear austerity monetary policy. But he also admitted that the task of avoiding recession has become more challenging in recent months.
