![]() And when adjusting for inflation, consumer spending was flat.ĭespite the Federal Reserve’s most aggressive rate-hiking campaign in decades, which was put on hold last month, the labor market has held remarkably steady while inflation has slowed, raising the odds of a so-called soft landing - or a scenario in which the Fed succeeds at bringing down inflation without throwing the economy off a cliff. Spending picked up by 0.1% in May, a slower pace than April’s 0.6% gain, according to figures from the Commerce Department. “The recent fall in gas prices and rise in stock prices are boosting consumers’ confidence,” wrote Kieran Clancy, senior US economist at Pantheon Macroeconomics, in an analyst note.Ĭonsumer spending, which accounts for about two-thirds of economic output, has weakened somewhat in recent months as the economy slowed. The survey showed a broad improvement across all of its components, “led by a 19% surge in long-term business conditions and 16% increase in short-run business conditions,” according to the release. “The sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labor markets,” said Joanne Hsu, director of the Surveys of Consumers, in a release Friday. ![]() REUTERS/Leah Millis/File Photo Leah Millis/Reuters/FILE ![]() FILE PHOTO: Federal Reserve Board Chair Jerome Powell holds a news conference after the Fed raised interest rates by a quarter of a percentage point following a two-day meeting of the Federal Open Market Committee (FOMC) on interest rate policy in Washington, U.S., March 22, 2023.
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