In February, U.S. consumer spending increased by 0.4%, yet it was below the anticipated rebound of 0.5%. This cautious approach from households is reflected in significant declines in dining and travel expenditures, which decreased by 15%. The decline in non-profit spending, likely affected by government funding cuts, also emphasizes this trend. While durable goods sales helped bolster spending figures, rising inflation and uncertainty, exacerbated by tariffs, raise concerns about future consumer behavior and economic stability as core inflation hits 2.8%.
Consumer spending in the United States rose 0.4% in February, falling short of economists' expectations, as households cut back on dining and travel amid rising costs.
Despite a modest overall rise in consumer spending, a significant drop in expenditures for restaurants, hotels, and non-profits indicates caution among American households regarding non-essential purchases.
Federal Reserve Chair Jerome Powell noted that rising inflation is partly driven by tariffs, potentially delaying the progress needed to meet the Fed's inflation target.
Core inflation rose to 2.8% in the 12 months to February, indicating increasing economic pressures on American consumers.
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