US consumer spending barely budged in April even as annual inflation surged to its highest level since 2023, with the Iran war's impact on energy prices increasingly rippling through the American economy and squeezing household finances.
Inflation-adjusted consumer spending rose just 0.1% last month, while the personal consumption expenditures price index climbed 3.8% from a year earlier, according to a report from the Bureau of Economic Analysis released Thursday.
-
Indian Markets Turning Corner After Two Tough Years, Says Sandeep Tandon -
NDTV Profit Ignite 2026: Experts See Opportunity In Equities, Stay Bullish For Long-Term -
Buy Right, Sit Tight Does Not Work for Individual Stocks, Says Dinshaw Irani -
'Worst Is Behind': Quant MF Sees Market Bottom, Flags 'Extreme Euphoria' In Midcaps -
India's Mutual Fund Industry Could Become A $1 Trillion Opportunity, Say Fund Managers -
'Foreign Investors Are Baraatis': Raamdeo Agrawal's Take On LTCG Tax -
Stay Invested Through Market Cycles: Raamdeo Agrawal at NDTV Profit Ignite -
Ramesh Damani Remains Bullish On India For Next 20-30 Years, Sees Bargains Amid Market Weakness -
CAS Came After A Long Consultation Process: SEBI Chairman Tuhin Kanta Pandey AT NDTV PROFIT IGNITE -
Aim To Cut FPI Onboarding Time From Mth To Five Days: SEBI Chairman Tuhin Kanta Pandey AT NDTV PROFI
The core PCE index, which strips out food and energy, rose 3.3% year-on-year, though the closely watched monthly increase in core PCE came in at 0.2% — slightly below expectations, offering a sliver of relief to markets. US stock index futures pared losses after the release, while 10-year Treasury yields fell.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
The numbers paint a picture of a consumer under growing strain. Inflation-adjusted disposable income fell 0.5% in April, marking the third consecutive monthly decline, while the saving rate dropped to 2.6% — its lowest since 2022.
ALSO READ: Goyal Recommends Dual Degree Programs To Canada For Furthering Cooperation On Education
Personal income was flat, with wages and salaries advancing just 0.2%. The surge in fuel costs sparked by the Middle East conflict has driven consumer sentiment to record lows, with prices at the pump rising to their highest levels in nearly four years.
Retailers are feeling the heat too. Walmart's Chief Financial Officer John David Rainey told Bloomberg last week that while high-income consumers are "spending with confidence in many categories," low-income consumers are "more budget-conscious, trying to navigate certain financial distress."
Brent crude futures, while easing slightly this week, remain more than 30% higher than before the war began.
ALSO READ: Indian Banks More Exposed To West Asia Crisis Among APAC Region: Moody's
The inflation data is likely to reinforce warnings from Federal Reserve officials about the prospect of interest rate hikes. Kevin Warsh, sworn in as Fed chairman on May 22, will need to convince colleagues that such hikes are unnecessary to keep inflation expectations anchored.
Separately, the Bureau of Economic Analysis revised first-quarter GDP growth down to a 1.6% annualised pace from an initial estimate of 2%, following downward revisions to inventory investment and consumer spending — adding to concerns about the economy's underlying momentum.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
