In May, spending rose just 0.2% from 0.6% in April and income rose 0.5%, according to Commerce Department data released Thursday.

At the same time, inflation accelerated to 0.6% from 0.2% in April.

Over one year, however, it stabilized at 6.3%, according to the PCE index, one of the main indicators of inflation, favored by the Federal Reserve (Fed).

The other inflation indicator, the CPI index, published by the Department of Labor and used in particular for calculating pensions, had reported an even stronger rise in prices (+8.6% in May on a year).

The two measures are calculated from different baskets of goods and services, which explains the difference between the two measures.

Inflation, which is chipping away at Americans' purchasing power and embarrassing US President Joe Biden, is a threat to economic growth, with consumption being the main driver of the US economy.

Already in the first quarter, the gross domestic product (GDP) of the United States contracted a little more than initially forecast, falling 1.6% at an annualized rate, due to a downward revision personal consumption expenditure.

Inflation in the United States Eléonore HUGHES AFP/Archives

"In real terms", that is to say adjusted for inflation, "consumption fell by 0.4%" in May, observes Rubeela Farooqi, chief economist of High Frequency Economics in a note.

And "disposable household income has weakened".

– “Warning signal” –

According to her, "the weakening of the inflation-adjusted PCE in May is a warning signal as to the growth trajectory ahead".

"If spending stays at May's level in June, consumption will moderate in the second quarter, to just 0.9% year-on-year, from 1.8% in the first quarter and 2.5% in the fourth" 2021.

This slowdown could, however, satisfy the American central bank which, since March, has been aggressively increasing its key rates, precisely to temper demand and therefore the pressure on prices.

the American central bank, March 16, 2022 in Washington SAUL LOEB AFP / Archives

Its president has already said that the institution intends to further raise these rates by the end of the year.

During the pandemic, Americans have accumulated significant savings, thanks to substantial state aid and an inability to consume due to containment measures and activity restrictions.

Then, the strong recovery in demand combined with problems in supply chains fueled high inflation, which worsened with the spike in energy prices triggered by the Russian invasion of Ukraine in late February.

Excluding volatile food and energy prices, inflation rose to 0.3% in May, the same pace as in April.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, notes that the three-month average increase has fallen at the slowest rate since November, and observes that it is "a sharp decline from the peak of 5.7 % in February".

“A combination of slower wage gains, lower markup inflation and a stronger dollar is starting to cause underlying inflation to slow sharply,” he said, even though he "there is still a lot to do".

The Fed raises its main interest rate Patricio ARANA AFP/Archives

The White House's chief economic adviser, Brian Deese, welcomed the "moderation in inflation" excluding volatile prices over the past three months.

Failing to be able to act on energy prices, the Biden administration "is particularly focused" on sectors where there is a concentration of companies and "unusually high" prices.

The Fed's objective is to bring inflation down to 2%, a level considered good for the economy.

Some economists believe that slowing inflation could be accompanied by a brief recession.

For now, central bank officials believe they can avoid it.

According to Rubeela Farooqi, the data released on Thursday is unlikely to change course.

"With the threat of sustained inflation front and center, this data is unlikely to alter the path of rates, which remain firmly on the upside," she said in an analysis.

© 2022 AFP