Consumers dialed back their spending in May, thanks to rising prices and interest rates

The federal Bureau of Economic Analysis has reported that in May — for the first time this year — consumer spending declined on a month-to-month basis after accounting for inflation. 

Real personal consumption expenditures were down 0.4% from April. 

Consumer sentiment is down in the dumps. Personal financial anxieties are mounting — driven by persistently rising prices as well as interest and mortgage rates. That’s making consumers even more worried about covering their basic monthly expenses. 

So they’re cutting discretionary spending and delaying or canceling big-ticket purchases like homes, cars and appliances. More people are dipping into savings or charging up their credit cards to make ends meet. 

“We’re spoiled because we haven’t seen explosive inflation in quite a few decades. Many, many Americans are young enough not to have any experience with this,” said Mark Cohen, who directs retail studies at Columbia Business School.

As consumers adapt to higher prices, he added, they’ll keep pulling back their spending accordingly.