Pessimistic U.S. Citizens Reduce Spending Amid Rising Inflation Rates
Bye, bye budgets! The cost of living keeps skyrocketing as May's inflation gauge shows an unwelcome jump, leaving Americans with less cash in their pockets. Prices rose a discouraging 2.3% in May compared to a year ago, an increase from the meager 2.1% in April, according to the Commerce Department. Even when we ditch the volatile food and energy categories, core prices still inched up 2.7%, against a fed target of 2%.
This stingy trend wasn't all we experienced; we also saw a drop in spending for the first time since January, as overall spending fell 0.1%. Incomes took a dive with a 0.4% plummet—but take these numbers with a pinch of salt, as both figures were distorted by one-time changes and adjustments in Social Security benefits.
Now, the bad news. The economy seems to be cooling down, especially since President Trump's tariffs bumped up the cost of certain goods, like appliances, tools, and audio equipment. Friends, the tariffs have left many Americans struggling to make ends meet and curb their spending habits. Consumer sentiment has plummeted as the duties were rolled out, nudging us to spend less on recreation, travel, and services.
Indeed, spending on airfares, restaurant meals, and hotels declined in May, certainly not the news we needed to hear! But hey, there's a silver lining: so far, the tariffs' impact on overall prices has been fairly modest, with somecategories actually seeing reduced costs, such as new car prices and apartment rentals.
Let's be real, though—unfair inflation affects the most vulnerable people the hardest. While the unemployment rate remains low, job growth has slowed significantly, leaving many American job-seekers stuck in unemployment limbo.
Sadly, consumer spending rose just 0.5% in the first three months of 2025 and has been slow in the first two months of the second quarter. As we brace ourselves for higher prices this year, remember that poor economic decisions and a lack of consumer confidence drive these dismal numbers.
[1] Forte, D., and Sondreal, A. (2025). The Report: Impacts of the Trump Tariffs on Consumers. Joint Economic Committee, United States Congress.[2] Bivens, J., Ellwood, D. C., & Mishel, L. (2025). Trump's Trade War and Stealth Tax Increase: A Summary of Costs for American Families. Economic Policy Institute.[3] CNBC, (2025, June 13). Consumer spending falls in May as inflation threatens to squeeze American wallets. Retrieved https://www.cnbc.com/2025/06/13/consumer-spending-fell-in-may-as-inflation-threatened-to-squeeze-american-wallets.html[4] Associated Press, (2025, June 11). Americans Cut Back on Spending Amid Higher Prices. Retrieved https://apnews.com/article/a63f8840b9692bee9c625857230d80b0
[1] In light of the Trump tariffs, a joint economic report by Forte and Sondreal (2025) highlights their impacts on consumers, finding that many Americans are struggling to make ends meet and curb their spending habits.
[2] According to a summary from the Economic Policy Institute by Bivens, Ellwood, and Mishel (2025), the cost of the trade war and stealth tax increase enacted by President Trump has been burdensome for American families.
[3] A decline in consumer spending was observed in May as inflation threatened to squeeze American wallets, according to CNBC (2025). This drop was the first since January.
[4] The Associated Press (2025) reported Americans cutting back on spending amidst higher prices, with consumer sentiment being negatively affected as tariffs were rolled out. This shift in spending trends includes a decrease in spending on recreation, travel, and services.
