Consumer spending slowed sharply final month — good news for policymakers apprehensive about inflation, but in addition an indication {that a} essential engine of the financial restoration might lastly be dropping steam.

U.S. customers spent simply 0.1 % extra in May than the month earlier than, the Commerce Department said Friday. That was down from 0.6 % development in April, which was revised down from an earlier estimate of 0.8 %. Adjusted for inflation, spending in May was flat. The figures can bounce round from month to month, however forecasters count on spending to proceed to chill as rising rates of interest and dwindling financial savings take a toll on customers’ pocketbooks.

The stunning resilience of client spending is a giant a part of the explanation that the economic system has to date defied predictions of a recession. For a lot of this yr, Americans have continued to shell out for vehicles, holidays and restaurant meals, serving to to offset weak spot in different sectors of the economic system, like enterprise funding and housing. If that adjustments, a recession might turn into inevitable.

Still, a extra modest slowdown can be welcome news for officers on the Federal Reserve, who’ve been involved that robust client demand is pushing up costs and making it tougher for the central financial institution to deliver inflation underneath management.

Policymakers are unlikely to take an excessive amount of consolation from a single month of knowledge. Spending has proven indicators of slowing earlier than — most just lately on the finish of final yr — solely to select up once more after a pair months. And so long as the job market stays robust, Americans can have cash to spend: Personal revenue rose 0.4 % in May, barely quicker than in April, pushed by continued robust will increase in wages and salaries.

But this time round, there are hints that customers have gotten extra cautious. After months of drawing down financial savings amid rising costs, Americans have begun saving extra, which traditionally has been an indication of worries in regards to the economic system. And extra households are falling behind on debt funds, suggesting they’re having a tougher time maintaining with rising costs.

“Consumers are saving more and spending less, perhaps out of caution as most believe a recession is either here or imminent,” Robert Frick, company economist with Navy Federal Credit Union, wrote in a word to shoppers.

Fed officers will get a recent have a look at the state of the labor market subsequent week, when the Labor Department releases information on job openings, hiring and unemployment.