Pulling Forward Purchases Likely Over as Consumers Shift into Savings Mode

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