More Spending: What We Learned During the Week of June 22 – 26

Consumer spending grew in May. Here are five things we learned from U.S. economic data released during the week ending June 26. 

Personal spending picked up in May. Real Personal Consumption Expenditures (PCE) grew 0.3 percent on a seasonally adjusted basis after being flat in April. Goods expenditures jumped 0.5 percent (durable goods: +0.9 percent and nondurables: +0.3 percent), while spending on services edged up 0.2 percent. Without inflation adjustments, nominal PCE jumped 0.7 percent, supported by matching 0.7 percent gains for nominal personal income and disposable income. With inflation adjustments, real disposable income increased 0.3 percent. Over the past year, real PCE has risen by 2.1 percent, while real disposable income has been unchanged (hence the savings rate has fallen from +4.9 percent to +3.0 percent). The same Bureau of Economic Analysis report has the Federal Reserve’s preferred inflation measure (PCE Price Index) at +0.4 percent in May and up 4.1 percent over the past year. The core PCE Price Index (net of both energy and food) grew 0.3 percent in May and 3.4 percent over the past year.

The U.S. economy grew a bit faster than previously believed in the first quarter. The Bureau of Economic Analysis’s third estimate of 2026Q1 Gross Domestic Product (GDP) shows the U.S. economy expanding 2.1 percent on a seasonally adjusted annualized basis. This is a revision from last month’s +1.6 percent estimate and the initial +2.0 percent estimate. By far the largest contributor to Q1 GDP growth was fixed nonresidential investment (business investment), adding 142 basis points, largely due to technology investments. Also making positive contributions were federal government spending (+57 basis points), the change in personal consumption expenditures (+37 basis points), private inventories (+23 basis points), and state/local government expenditures (+17 basis points). Drags on Q1 growth were net exports (-37 basis points) and fixed residential investment (housing) (-30 basis points). Corporate profits were up by an annualized 1.7 percent for the quarter and 12.8 percent from a year earlier.

Economic growth slowed in May. The Chicago Fed National Activity Index (CFNAI) declined 29 basis points to -0.10. The CFNAI’s three-month moving average, at -0.03, was 10 basis points lower than in April. A CFNAI reading between -0.70 and zero indicates that the U.S. economy grew at a rate slower than its historical average. Even with the decline, the CFNAI was up 20 basis points from a year ago. Only 35 of the CFNAI’s 85 components contributed positively to the index, while the other 50 had a negative impact. Sales/orders/inventories measures made a +0.02 contribution, while those for production, employment, and personal consumption/housing each made -0.04 contributions.

Durable goods orders fell in May (but that was mainly due to a drop in aircraft orders). New orders for manufactured durable goods slumped 4.5 percent to a seasonally adjusted $332.1 billion, per the Census Bureau. Year-to-date durable goods orders of $1.618 trillion were up 6.2 percent over the comparable 2025 period. Orders for transportation equipment declined 14.0 percent, with orders for civilian aircraft down 51.8 percent. Excluding transportation goods, core durable goods orders rose 1.3 percent for the month, with year-to-date orders up 7.7 percent. For the month, orders grew for primary metals (+3.0 percent), machinery (+1.9 percent), fabricated metal products (+1.5 percent), computers/electronics (+0.3 percent), and electrical equipment/appliances (+0.3 percent).

Consumer confidence remained low in June. The University of Michigan’s Index of Consumer Sentiment added 0.7 points to a seasonally adjusted 49.5 (1966Q1=100). The measure was off 18.5 percent from a year earlier. The current conditions index rose 2.2 points to 47.7 (-26.4 percent versus June 2025), while the expectations measure jumped 6.6 points to 50.7 (-12.7 percent versus June 2025). The press release notes that “cost of living remains at the forefront of consumers’ minds.” One-year inflation expectations were elevated at +4.6 percent.

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

• Jobless Claims (Week ending June 20, 2026, First-Time Claims, seasonally adjusted): 215000 (-12,000 vs. the previous week, -21,000 vs. the same week a year earlier). 4-week moving average: 224,250 (-7.4% vs. the same week a year earlier).
• New Home Sales (May 2026, Sales of New Single-Family Homes, seasonally adjusted annualized rate): 580,000 (-7.3% vs. April 2026; -6.8% vs. May 2025).
• State Employment (May 2026, Nonfarm Payrolls, seasonally adjusted): Up in 2 states and unchanged in 48 states and the District of Columbia vs. April 2026; Up in 2 states, down in 1 state, and unchanged in 48 states and the District of Columbia vs. May 2025.

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