Consumer spending rises as inflation remains mild in April

In April 2025, the United States saw personal consumption expenditures increase by 2.1%, which was slightly below economists' expectations. This mild inflation trend occurred alongside a pullback in consumer spending as Americans adjusted their buying habits due to the ongoing effects of tariffs implemented by the Trump administration. Data from the Commerce Department indicated a significant drop in the personal saving rate from March to April, reflecting a shift in consumer behavior as many opted to save rather than spend. PCE inflation was reported at 2.1%, marking the lowest rate since September of the previous year, while the core PCE inflation, which excludes food and energy, was at 2.5%, the lowest since March 2021. Despite the government’s assessment illustrating that inflation eased again, economists expect that the numerous changes in trade measures could lead to heightened prices in the latter months of the year. The consensus among financial experts from firms such as Bank of America and Goldman Sachs is that inflation could rise to more than 3.5% by December 2025. This anticipated increase stems from concerns that the array of tariffs could continue to affect retail prices adversely. Additionally, recent tariffs have influenced consumer purchasing patterns, causing Americans to spend more cautiously, especially on durable goods. The landscape of American trade and consumption continues to fluctuate as consumers adapt to the changing economic conditions under Trump’s tariff policies. As the summer progresses, analysts are monitoring how these economic indicators might affect employment figures and the overall economy going forward.