People are spending more on gas and housing, and less on just about everything else.
Consumer spending has been one of the economy’s bright spots as recession fears rise. It was a major reason the gross domestic product, a broad measure of the country’s economic output, grew instead of shrank in the first quarter of the year.
However, a closer look at data released Friday by the Bureau of Economic Analysis reveals people cut back on all purchases outside necessities like food and housing in March.
"That is hardly the spending profile of a heedless consumer on a spending spree,” Tim Quinlan and Shannon Seery, economists at Wells Fargo Securities, wrote in a commentary.
Rising wages in a labor market that still favors workers have been propping up spending, while still-elevated inflation and higher borrowing costs have been pushing in the opposite direction. The outcome of that tug-of-war will have a major impact on the economy, since consumer spending is the engine of economic growth, accounting for 68% of the total GDP.