Shoppers Lose Resilience as They Face Off Inflation

What Thursday’s Economic Reports Mean For You

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Spending declined for the first time this year as prices continue to push upward, but people are saving a bit more, reports showed Thursday. Fewer people filed first-time unemployment claims as well.

Here’s a quick look at the most significant economic indicators of the day and what they mean for consumers.

PCE Inflation

May 2022 Monthly Growth May 2022 Yearly Growth
0.6% 6.3%
  • The Number: The Federal Reserve’s preferred measure of inflation rose 0.6% in May compared with 0.2% in April, fueled by a surge in energy and food prices, the Bureau of Economic Analysis reported Thursday. The annual inflation rate was the same as the previous month and less than the 6.4% analysts had anticipated, but it still packed a punch, causing consumers to pull back on their inflation-adjusted spending for the first time this year.
  • What the Economists Are Saying: Shoppers are finally hitting the brakes as everything continues to get more expensive. Economists had lauded the fact that spending remained resilient, but now that may be coming to an end.
  • What It Means for You: Prices for things other than food and energy rose a bit more slowly than in the previous month, but that’s likely not enough for Fed officials to halt the aggressive interest rate hikes they hope will get inflation under control. Expect interest rates to keep going up and prices for everyday items to remain high.

Personal Income

May 2022 Monthly Growth April 2022 Monthly Growth
 0.5% 0.5%
  • The Number: Growth in personal income remained steady in May, and people saved more of their money for the first time this year, according to the Bureau of Economic Analysis.
  • What the Economists Are Saying: The growth in income was higher than predicted,  but after taking inflation and taxes into account, it is far below the track it was on before the pandemic. 
  • What It Means for You: You may be making more, but you’re probably not keeping up with ballooning prices for the things you need to buy. 

Jobless Claims

Week Ending June 25 Week Ending June 18 4-Week Moving Average
231,000 233,000 231,750
  • The Number: About 2,000 fewer people filed initial unemployment claims last week than the week before, according to the Department of Labor. New unemployment claims are still very low compared with historical levels, but the four-week moving average could be a cause for concern if it inches north of 250,000 and remains there.
  • What the Economists Are Saying: The number of people filing unemployment claims fell less than expected, and economists think it could be an indicator that more people will be filing in the next several weeks.
  • What It Means for You: As business leaders hold their breath for what they think is an oncoming recession, layoffs and hiring freezes may increase.

Have a question, comment, or story to share? You can reach Taylor at ttompkins@thebalance.com.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1.  Bureau of Economic Analysis. “Personal Income and Outlays, May 2022.”

  2. Bureau of Economic Analysis.”Personal Income and Outlays, May 2022.”

  3. Department of Labor. "Unemployment Weekly Insurance Claims."

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