U.S. households turned cautious at the end of last year, cutting spending during the holiday shopping season and increasing savings, adding to signs of an economic slowdown. Consumer spending fell a seasonally adjusted 0.2% in December from the prior month, the Commerce Department said Friday, the second straight monthly drop following solid spending increases during several months last year. Adjusted for inflation, spending fell 0.3% last month. The pullback in spending came as inflation cooled, giving consumers some relief from rapidly rising prices. Households cut spending on goods as prices fell for gasoline and other energy products, the department said. They increased spending on services, where prices climbed. … The figures leave Fed officials on track to raise interest rates by a quarter-percentage point to a range between 4.5% and 4.75% at their meeting next week, where they also are expected to debate how much higher to raise rates this year. The Fed raised rates aggressively last year in a campaign to cool the economy and bring down high inflation.
Source: WSJ
