US consumer spending rebounded in February, likely driven by rising prices, which could heighten concerns about a period of slow growth and high inflation in the American economy, in a context of growing trade tensions.
Le Bureau of Economic Analysis du Department of Commerce announced Friday that the consumer spending, which represent more than two-thirds of economic activity, have increased by 0,4% in February, after a revised drop of 0,3% in JanuaryEconomists expected an increase of 0,5%, after a drop in 0,2% the previous month, according to Reuters.
Since taking office in January, the president Donald Trump announced a series of tariff measures, including a 25% tax on imported cars and light trucks, which will come into effect next week. Economists estimate that the scale and implementation of these tariffs have harmed economic growth, leading to a sharp deterioration in business and consumer confidence and increasing the risks of recession. U.S. trading partners should respond by imposing their own customs duties, which could further widen the trade deficit, as companies rush to secure their imports.
In front of the expected price increase, consumers stepped up their spending in December, but the slowdown in advance purchases, combined with extreme weather conditions such as snowstorms, slowed consumption at the beginning of the year.
Prior to the release of these data, forecasts of GDP growth for the first quarter were counting on a annual rate of 1%, with an increase in the risks of contraction. The American economy had grown by 2,4% in the third quarter (October-December).
Trump, who considers the customs fees as a means of increasing revenue for offset tax cuts and strengthen American industry, plans to announce a new wave of reciprocal tariff measures next weekHowever, economists warn that these tariffs could fuel inflation in the short term.
Regarding inflation, consumer expectations have risen sharply. The president of the Federal Reserve, Jerome Powell, acknowledged last week that inflation had begun to accelerate, partly due to tariffs, adding that there could be a delay in the progress expected this year.
In February, the personal consumption expenditure (PCE) price index increased by 0,3%, after a similar increase in January. On twelve months, prices have increased by 2,5%, a stable level compared to January.
Excluding volatile components of food and energy, the core PCE index increased by 0,4% in February, after an increase of 0,3% in January. Sure twelve months, core inflation increased by 2,8%, against 2,7% in January. The Federal Reserve monitors these indicators closely to achieve its objective of a inflation at 2%.
Last week, the Fed maintained its key rate unchanged, within a range of 4,25% to 4,50%. Financial markets anticipate a resumption of monetary easing in June.
