US Shoppers: Running Low on Fuel

Economic Uncertainty and Consumer Challenges

Recent developments between the U.S. and Iran are not the only issues facing instability. American consumers are feeling the strain, both in terms of their finances and daily lives. Risks to actual consumer spending are becoming increasingly apparent, with the primary worry being the ongoing decline in purchasing power and savings caused by rising inflation.

In the first two months of the year, core PCE inflation surged at an annualized rate of 4.7%, as illustrated in Chart 1. Meanwhile, the headline inflation rate climbed to 4.6% annualized in February, up from 3.7% in January. March saw a further increase of 0.9%.