Consumer spending fell in May as food, fuel prices stoked inflation

[mystery-ak]

 Consumer spending fell in May as food, fuel prices stoked inflation
by Sylvan Lane - 06/30/22 8:46 AM ET

Consumer spending dropped in May as food and fuel prices rose sharply, according to data released Thursday by the Commerce Department.

Personal consumption expenditures (PCE), a measure of consumer spending, rose 0.2 percent in May but fell 0.4 percent when adjusted for inflation. While personal incomes rose 0.5 percent in May, they fell 0.1 percent after adjusting for inflation.

The decline in consumer spending came as prices rose 0.6 percent overall in May, according to the Commerce Department’s PCE price index, a gauge of inflation. Without food and fuel prices, the PCE index rose 0.3 percent for the third consecutive month in May.

The PCE index rose 6.3 percent in the 12 months ending in May, in line with April’s annual inflation rate, and 4.7 percent without energy prices. The annual increase in the PCE without food and energy fell to 4.7 percent in May, declining for the third consecutive month.

more
https://thehill.com/policy/finance/3542426-consumer-spending-fell-in-may-as-food-fuel-prices-stoked-inflation/

[catfish1957]

When non-discreationary  income trends sharply lower, what do they expect? 

[DefiantMassRINO]

Inflation + FED tightening = increased cost of money + increased cost of goods = less discretionary post-tax income

[catfish1957]

The 2 Thousand Pound Elephant in the room that Pedo Joe's economic team doesn't want to remotely discuss, is how and when the real estate bubble pops after a barrage of interest rate hikes.

The last data I could find shows is the average American sadly has about 53% of their net worth in their residence.  Then think what is going to happen to the supply/demand curve of home equity prices when mortgage rates reach 8-12%.  My best guess is that home prices will easily drop 50% nationwide, and up to 75% in overpriced areas like CA, NY, CT, etc.

That same drop will carryover into the equity markets.  Rough seas ahead to be sure.

[Fishrrman]

catfish wrote:
"The last data I could find shows is the average American sadly has about 53% of their net worth in their residence.  Then think what is going to happen to the supply/demand curve of home equity prices when mortgage rates reach 8-12%.  My best guess is that home prices will easily drop 50% nationwide, and up to 75% in overpriced areas like CA, NY, CT, etc."

Gee, you act as if your prediction is gonna be a bad thing.

Au contraire.
It's exactly WHAT WE NEED to get inflation under control, and to also bring home prices down to where asking prices once more actually represent the "true value" of the property, not some phony pumped-up "market value".

[DefiantMassRINO]

We need supply-side economics ... make more of the stuff we need in America, North America, the Western Hemisphere, and West Africa ... anywhere but China, East Asia, Europe, and the Middle East.

[libertybele]

The 2 Thousand Pound Elephant in the room that Pedo Joe's economic team doesn't want to remotely discuss, is how and when the real estate bubble pops after a barrage of interest rate hikes.

The last data I could find shows is the average American sadly has about 53% of their net worth in their residence.  Then think what is going to happen to the supply/demand curve of home equity prices when mortgage rates reach 8-12%.  My best guess is that home prices will easily drop 50% nationwide, and up to 75% in overpriced areas like CA, NY, CT, etc.

That same drop will carryover into the equity markets.  Rough seas ahead to be sure.

Depression on the horizon?

[catfish1957]

Depression on the horizon?

I think some form of economic collapse is inevitable. I am still torn between whether it comes in the form of'30's like depression, or Zimbawe/Weinar type hyperinflation.

The moment of truth will be when the government has to start making decisons on entitlement cuts.

[libertybele]

I think some form of economic collapse is inevitable. I am still torn between whether it comes in the form of'30's like depression, or Zimbawe/Weinar type hyperinflation.

The moment of truth will be when the government has to start making decisons on entitlement cuts.

God help us.

[catfish1957]

catfish wrote:
"The last data I could find shows is the average American sadly has about 53% of their net worth in their residence.  Then think what is going to happen to the supply/demand curve of home equity prices when mortgage rates reach 8-12%.  My best guess is that home prices will easily drop 50% nationwide, and up to 75% in overpriced areas like CA, NY, CT, etc."

Gee, you act as if your prediction is gonna be a bad thing.

Au contraire.
It's exactly WHAT WE NEED to get inflation under control, and to also bring home prices down to where asking prices once more actually represent the "true value" of the property, not some phony pumped-up "market value".

It may be a tragic wiping the slate clean.  Extrapolated, half of 53% would be an approximately total loss of 1/4 of the net worth of Median America.  I take no joy in any misfortune of our fellow citizens.  They are already struggling to save enough to live to old age.