For the second consecutive month, U.S. consumer spending retreated, falling 1 percent in dollar volume in March compared to February, the commerce department reported.
Shoppers bought fewer appliances, electronics, and vehicles and bought less furniture, deterred by higher interest rates on installment payments, The Wall Street Journal noted. Sales at department stores also retrenched.
Falling gasoline prices also took fewer consumer dollars last month.
The measure targets spending on goods; few services are included.
Compared to March 2022, retail spending last month increased 2.9 percent, the smallest annual gain since June 2020.
Factory output, which also is sensitive to interest rates, was down 0.5 percent month over month in March, according to the U.S. Federal Reserve.
In this year’s first quarter, the U.S. economy expanded by 2.5 percent, the Federal Reserve Bank of Atlanta’s GDP monitor showed, slightly slower than in the quarter before.
The S&P Global Market Intelligence was less optimistic, putting the figure at 1.9 percent and predicting a 0.2-percent contraction in the second quarter.
TREND FORECAST: Again, the calculation is simple. The higher interest rates rise the deeper the economy will fall. And, what is not being reported in the mainstream media is that the effects of higher interest rates take time to ripple through the economy… but that ripple will soon be a shot heard around the world.