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U.S. Consumer Spending Drops Amid Easing Inflation and Tariff Fears

U.S. consumer spending decreased by 0.2% in January as inflation fell, raising concerns over economic resilience amid proposed tariffs.

c 50%

r 50%

Fed's favorite core inflation measure hits 2.6% in January, as expected

CNBC

Fed’s preferred inflation gauge cools slightly in January after heated data this month

New York Post

US consumers cut spending in January more drastically than at any point in the last four years

Associated Press

The PCE report, the Fed's preferred inflation measure, is out. Here's what it says.

CBS News

Inflation gauge favored by Fed showed prices grew as expected in January

Fox Business

Inflation Ticks Down to 2.5%, in Line With Forecasts

Newsmax

Overview

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In January, U.S. consumer spending fell by 0.2%, the largest drop since February 2021, despite inflation easing to 2.5%. Although incomes rose 0.9%, consumer sentiment waned due to uncertainties surrounding President Trump's proposed tariffs which threaten to push prices higher. The Federal Reserve is monitoring these developments closely, and while inflation has cooled from its 2022 peak, rising tariffs could complicate economic recovery efforts. Economists remain cautious as higher tariffs could exacerbate inflation concerns, dampening consumer confidence and spending patterns.

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Analysis

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U.S. consumer spending saw a notable decline in January, the most significant drop since February 2021, amid rising economic uncertainty and fears of tariffs.
While inflation eased slightly to 2.5% annually, there are concerns about the impact of proposed tariffs on future price increases and economic activity.
Personal income increased significantly, but the higher income levels did not translate into increased consumer spending, indicating cautious behavior among consumers.

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Center (3)

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Fed's favorite core inflation measure hits 2.6% in January, as expected

CNBC·4M·

Center

This outlet is balanced or reflects centrist views.

Reliable

This source consistently reports facts with minimal bias, demonstrating high-quality journalism and accuracy.

Fed's favorite core inflation measure hits 2.6% in January, as expected

No highlight available for this article.

US consumers cut spending in January more drastically than at any point in the last four years

Associated Press·4M·

Center

This outlet is balanced or reflects centrist views.

Reliable

This source consistently reports facts with minimal bias, demonstrating high-quality journalism and accuracy.

US consumers cut spending in January more drastically than at any point in the last four years

No highlight available for this article.

The PCE report, the Fed's preferred inflation measure, is out. Here's what it says.

CBS News·4M·

Center

This outlet is balanced or reflects centrist views.

Reliable

This source consistently reports facts with minimal bias, demonstrating high-quality journalism and accuracy.

The PCE report, the Fed's preferred inflation measure, is out. Here's what it says.

FAQ

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: The decrease in consumer spending was influenced by factors such as higher bills for essentials like energy, housing, and groceries, as well as uncertainties surrounding proposed tariffs and economic conditions. Additionally, unseasonably cold weather may have impacted discretionary spending.
Morning Consult, KPMG
: Inflation eased to 2.5%, but despite this, consumer spending decreased. The easing of inflation did not seem to boost spending, possibly due to concerns about future price increases linked to proposed tariffs.
CBS News, VOA News
: Proposed tariffs are a significant concern for consumers, as they could lead to higher prices and dampen consumer confidence. This uncertainty has prompted some consumers to spend ahead of potential price hikes.
KPMG, Deloitte
: The Federal Reserve's decision to keep interest rates steady after previous cuts allows for cheaper borrowing, which can support consumer spending. However, the Fed is cautious due to economic uncertainties, including inflation and tariff impacts.
VOA News, Deloitte

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U.S. Consumer Spending Drops Amid Easing Inflation and Tariff Fears

Fed's favorite core inflation measure hits 2.6% in January, as expected

Fed’s preferred inflation gauge cools slightly in January after heated data this month

US consumers cut spending in January more drastically than at any point in the last four years

The PCE report, the Fed's preferred inflation measure, is out. Here's what it says.

Inflation gauge favored by Fed showed prices grew as expected in January

Inflation Ticks Down to 2.5&#37;, in Line With Forecasts

Overview

Analysis

Articles (6)

Fed's favorite core inflation measure hits 2.6% in January, as expected

US consumers cut spending in January more drastically than at any point in the last four years

The PCE report, the Fed's preferred inflation measure, is out. Here's what it says.

FAQ

History

Inflation Ticks Down to 2.5%, in Line With Forecasts