Consumer Spending Inflation Personal Consumption Expenditures Price Index Federal Reserve System July

Consumer Spending Falls for First Time in 2023

Inflation Weighs on Personal Consumption Expenditures

Consumer spending in the U.S. fell for the first time in 2023, according to data released by the Bureau of Economic Analysis.

Key Findings

• Personal consumption expenditures (PCE) fell 0.2% in July.
• This marks the first decline in PCE since December 2022.
• The PCE price index, a measure of inflation, rose 6.3% year-over-year in July.
• The core PCE price index, excluding food and energy, rose 4.6% year-over-year.

Impact on Federal Reserve

The decline in consumer spending and the continued high inflation could influence the Federal Reserve's decision on interest rates.

The Fed is expected to raise interest rates again at its next meeting in September, but the pace of hikes could slow.

Conclusion

The decline in consumer spending is a sign that inflation is weighing on consumers' wallets.

Businesses may need to adjust their strategies to account for the potential slowdown in demand.

Sources

• Bureau of Economic Analysis: Personal Consumption Expenditures, July 2023
• Federal Reserve System: Federal Open Market Committee (FOMC)