Charting the Global Economy: Consumer Spending Weakens in US

Yahoo

15 hours ago

(Bloomberg) -- US consumers are growing tired, according to fresh data that showed cutbacks in spending on big-ticket goods and services, extending a first-quarter demand slowdown.
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Inflation-adjusted consumer spending dropped last month by the most since January. Americans also stepped back from the housing market as new-home sales slid by the most in three years. At the same time, Federal Reserve policymakers indicated they're in little rush to lower interest rates.
In the euro area, business activity barely grew amid lingering uncertainty related to US tariffs and geopolitics. Meantime, profits at Chinese industrial firms sagged as the country battles deflationary forces.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:
US
Consumer spending declined in May by the most since the start of the year, indicating elevated uncertainty around the Trump administration's economic policies is increasingly weighing on the outlook for growth. The latest figures suggest sluggish household demand, especially for services, extended into May after the weakest quarter for personal consumption since the onset of the pandemic.
A flurry of Federal Reserve officials this week made clear they'll need a few more months to gain confidence that tariff-driven price hikes won't raise inflation in a persistent way. Fed Governors Christopher Waller and Michelle Bowman captured attention in the past week when they signaled they'd be open to lowering rates as soon as the Fed's July 29-30 meeting if inflation remains contained.
New-home sales fell 13.7% in May, the most in almost three years, as rampant incentives from builders fell short of alleviating affordability constraints. The latest results show homebuilders are sitting on rising inventories amid mounting economic challenges, including mortgage rates stuck near 7%, higher materials costs due to tariffs and a slowing labor market.
Europe
German companies are the most upbeat about the economy in more than two years as an imminent boost to public spending outweighs concerns over US tariffs and wars in the Middle East and Ukraine.
The euro area's private sector barely grew in June, remaining in limbo as erratic US trade policy and geopolitical conflicts leave companies in the dark on what's next.
Surging grocery bills are threatening to slow the pace of the Bank of England's interest-rate cuts by raising the risk that inflation will stay elevated even as the UK economy shows signs of sputtering. The prices of staples including butter, beef and chocolate in May were up nearly 20% from a year earlier, contributing to the biggest annual jump in overall food prices since February 2024.
Asia
China's industrial firms saw their profits drop the most since October, illustrating weakness in an economy strained by higher US tariffs and lingering deflationary pressure. Industrial profits fell 9.1% in May from a year earlier. The deterioration bodes ill for business confidence and could make companies more reluctant to invest and hire.
Apartment rents in Tokyo are rising at the fastest pace in 30 years in the latest sign for the Bank of Japan that the nation's inflation trend is spreading deeper through the economy. Rents in the capital climbed 1.3% from a year earlier in April and May for the largest gains since 1994, according to the Ministry of Internal Affairs.
Emerging Markets
Mexico's central bank again cut its benchmark interest rate by half a percentage point but it opened the door to smaller cuts going forward as policymakers worry the economy will continue to suffer headwinds after barely avoiding tipping into recession earlier this year.
World
In addition to Mexico's policy decision, central bankers in Paraguay, Morocco, Hungary, Thailand, Czech Republic, Guatemala, and Colombia all kept interest rates unchanged.
--With assistance from Irina Anghel, Matthew Boesler, John Liu, Catarina Saraiva, Michael Sasso, Zoe Schneeweiss, Mark Schroers, Fran Wang, Alexander Weber and Erica Yokoyama.
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