Consumers Took a Spring Break: June 23 – 27

Consumer spending slowed in May. Here are the five things we learned from U.S. economic data released during the week ending June 27.

Real personal income and spending fell, while inflation remained moderate, in May. Real Personal Consumption Expenditures (PCE) declined a seasonally adjusted 0.3 percent following increases during the two prior months. The Bureau of Economic Analysis reports that goods expenditures fell 0.8 percent (durables: -1.8 percent and nondurables: -0.3 percent), while spending on services remained steady. Without adjustments for inflation, nominal PCE slipped 0.1 percent as nominal personal income (-0.4 percent) and disposable income (-0.6 percent) fell. (Some of the decline reflected elevated gains in April thanks to some increased Social Security payments.) Real disposable income dropped 0.7 percent. The savings rate fell by 4/10^ths of a percentage point to +4.5 percent. The same report includes two measures of inflation—the PCE price index (+0.1 percent) and the core PCE Price Index (+0.2 percent)—both of which were up modestly for the month. Over the past year, the two inflation measures have grown 2.3 percent and 2.7 percent, respectively.

Existing home sales edged up in May. Sales of previously owned homes increased 0.8 percent to a seasonally adjusted annualized rate (SAAR) of 4.030 million units. The National Association of Realtors’ measure was off 0.7 percent from a year earlier. Sales increased during May in the Northeast, Midwest, and South, but declined in the West. Only the Northeast and Midwest enjoyed year-to-year sales gains. There were 1.540 million homes for sale at the end of the month, up 6.2 percent from April 2025 and 20.3 percent from May 2024, and the equivalent of a 4.6-month supply. The median sales price of $422,800 reflected a 1.3 percent gain from a year earlier.

New home sales slumped in May. The Census Bureau reports sales of new single-family homes dropped 13.7 percent to a seasonally adjusted annualized rate (SAAR) of 623,000. Sales were 6.3 percent below year-ago levels. Sales fell in three of four Census regions for the month (the Northeast being the exception) and two of four regions year-to-year (with the Northeast and West the exceptions). There were 507,000 new homes for sale, up 1.4 percent for the month and 8.1 percent from a year earlier. This translated into a 9.8-month supply. The median sales price of $426,600 was up 3.0 percent from a year earlier.

The two major consumer sentiment surveys moved in opposite directions in June. The Conference Board’s Consumer Confidence Index shed 5.4 points to a seasonally adjusted 93.0 (1985=100). A year ago, the index was at 97.8. The current conditions index lost 6.4 points to 129.1, while the expectations index pulled back by 4.6 points to 69.0. Historically, an expectations reading under 80 “typically” suggests a future recession. The press release noted that June’s contraction came across “all age groups and almost all income groups” and was particularly acute among Republicans.

Meanwhile, the University of Michigan’s Index of Consumer Sentiment jumped 8.5 points to a seasonally adjusted 60.7 (1966Q1=100). The index remained 11.0 percent below year-ago levels. The current conditions index added 5.9 points to 64.8 (-1.7 percent versus June 2024), while the expectations index surged by 10.2 points to 58.1 (-16.5 percent versus June 2024). While still elevated, consumers’ inflation expectations have cooled slightly: anticipated one-year inflation was at +5.0 percent and long-term inflation at 4.0 percent.

The U.S. economy expanded modestly in May. The Chicago Fed National Activity Index (CFNAI) grew by eight basis points to -0.28. Even with the improvement, the CFNAI remained within a range of zero and -0.70, indicative of the U.S. economy growing at a rate slower than its historical average. Twenty-eight of 85 CFNAI components made positive contributions, with the remaining measures dragging the index down. Three of four component categories made negative contributions: personal consumption/housing (-0.12), production (-0.11), and employment. Employment-related measures made a modest 0.05 contribution. The CFNAI’s three-month moving average lost 22 basis points to -0.24.

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending June 21, 2025, First-Time Claims, seasonally adjusted): 236,000, -9,000 vs. the previous week, +3,000 vs. the same week a year earlier). 4-week moving average: 245,000 (+4.3% vs. the same week a year earlier).
• Durable Goods (May 2025, New Orders for Manufactured Durable Goods, seasonally adjusted): $343.6 billion (+16.4% vs. April 2025). Year-to-year 2025 vs. year-to-date: +6.9%.
• Pending Home Sales (May 2025, Index (2001=100), seasonally adjusted): 72.6 (+1.8% vs. April 2025; +1.1% vs. May 2024).
• FHFA House Price Index (April 2025, Purchase-Only Index, seasonally adjusted): -0.4% vs. March 2025; +3.0% vs. April 2024.
• S&P/Case-Shiller Home Price Index (April 2025, National Index, seasonally adjusted): -0.4% vs. March 2025; +2.7% vs. April 2024.
• State Employment (May 2025, Nonfarm Payrolls, seasonally adjusted): Unchanged in all 50 states and the District of Columbia vs. April 2025. Increased in 18 states and unchanged in 32 states and the District of Columbia vs. May 2024.
• Agricultural Prices (May 2025, Prices Received by Farmers, not seasonally adjusted): +1.7% vs. April 2025; +13.2% vs. May 2024.

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.