|
|
The 0.5-percent gain in consumer spending in April resulted from a 1.1-percent jump in spending on services such as hair styling and gym visits, the U.S. Commerce Department reported. Spending on merchandise slid 0.6 percent during the month.
However, the rise in the amount of money spent came as the result of inflation, which bumped up 0.6 percent from March. Thus, when spending was adjusted to include inflation, consumers spent less in April than they did in March.
Overall, prices have been knocked higher, in some cases to record levels, by a combination of consumers venting pent-up demand, labor, and materials shortages, and disrupted supply lines.
TREND FORECAST: Inflation is hitting consumers in the pocket. And now, with gas prices rising higher, it will make them more concerned about rising prices. Indeed, the University of Michigan’s index of consumer sentiment fell to 82.9 in May from April’s 88.3.
Thus, as the hard data proves, in March, consumers consumed fewer products, but they cost them more.
Despite rising prices, we maintain there will be buying spikes for the rest of the summer into autumn as the COVID War temporarily winds down.