U.S. consumer spending unexpectedly fell in May, raising concerns about economic growth prospects.

On June 27, U.S. consumer spending unexpectedly declined in May, as the boost from pre-tariff purchases weakened and inflation remained moderate. Data released on Friday showed that consumer spending, which accounts for more than two-thirds of economic activity, fell by 0.1% last month, while the market had expected a rise of 0.1%. After the surge in pre-shopping faded, consumer spending nearly stagnated last quarter. Service spending also decreased, resulting in a quarterly increase of only 0.5% in consumer spending, the lowest since the second quarter of 2020.

The data indicates a weak consumption rise path in the second quarter. The combination of weak consumption and moderate inflation is still insufficient to prompt the Federal Reserve to restart interest rate cuts in July. Economists point out that the current moderate inflation is due to businesses still hoarding inventory before the sales tariffs took effect, and inflation is expected to start rising from the June CPI data.