US consumer spending rebounds less than expected

WASHINGTON: US consumer spending rebounded less than expected in February while a measure of underlying prices increased by the most in 13 months, stoking fears that the economy was facing period of slowing growth and high inflation amid an escalation in trade tensions.

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Those concerns were reinforced by a survey from the University of Michigan on Friday that showed consumers' 1-year inflation expectations jumped to 5.0% in March, the highest level since November 2022, the University of Michigan survey showed. That compared to 3.1% last month.

Over the past five years, they see inflation running at 4.1%, the highest reading since February 1993 and up from 3.5% in February. "Inflation expectations are the transmission mechanism in terms of a cost-push price level. If inflation turns into a game, then increases across the price level or inflation," said Joseph Brusuelas, chief economist at RSM US.

"A rational fiscal policymaker would look at the tone and tenor of the hard and soft data and conclude it's time to start cutting trade deals to limit the damage to the real economy." The BEA report showed the Personal Consumption Expenditures (PCE) price index increased 0.3% in February after advancing by the same unrevised margin in January and in line with economists' expectations.