Pulling Forward Purchases Likely Over as Consumers Shift into Savings Mode
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Global Economy Briefs

Timely insights from the Economy, Strategy & Finance Center

Consumers took a breather in April on large item purchases after splurging on autos, furniture and other durable goods earlier in Q1. Personal income growth rose at a solid pace as the labor market remains healthy, but such strength may have been exaggerated by temporary factors. Fed’s preferred inflation gauges continued to slow.

Pulling Forward Purchases Likely Over as Consumers Shift into Savings Mode

May 30, 2025

Consumers took a breather in April on large item purchases after splurging on autos, furniture and other durable goods earlier in Q1. Personal income growth rose at a solid pace as the labor market remains healthy, but such strength may have been exaggerated by temporary factors. Fed’s preferred inflation gauges continued to slow.

Trusted Insights for What’s Ahead®

  • Rising inflation will likely limit how much consumers will be able to spend on goods and services, leading to significant deceleration in economic growth this year.
  • A pullback from spending on tariff-affected goods will likely weigh on consumer spending in the remainder of the year.
  • The extent of a sharp increase in personal income growth in April was likely a bit misleading reflecting a one-off rise in Social Security benefits and a boost to wages and salaries for trade and transportation workers. We expect wages and salaries growth to slow as trade volumes subside.
  • In April, a subdued 0.1% m/m core PCE deflator print was a result of weaker services prices offsetting the impact of tariffs on durable goods inflation. Inflation will likely pick up before it resumes its downward path later this year.
  • Barring de-anchoring of longer-term inflation

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