Concerns about future finances and rising prices have Americans dialing back on purchases.
Rental prices are adding to the pain average people are already feeling from price jumps on everyday items. in May from a year earlier, faster than April’s year-over-year increase of 8.3%, the Labor Department reported earlier this month. The new inflation figure was the highest since 1981 and came after the Federal Reserve raised its main borrowing rate by a half point in early May in its effort to tamp down rising inflation.
The Labor Department’s producer price index — which measures inflation before it reaches consumers — also surged 10.8% in May from a year earlier, putting pressure on the Federal Reserve to become even more aggressive in its fight against historic inflation. The Fed responded a couple of weeks ago by raising its main borrowing rate by three-quarters of a point, its biggest increase since 1994. More rate hikes are expected this year.
The Conference Board’s survey showed that consumers grew more pessimistic about short-term business conditions, the job market and their own short-term financial prospects. Purchasing intentions for big-ticket items -- cars, homes and major appliances -- remained relatively stable, but rising costs for travel have forced Americans to dial back some vacation plans.
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