An influx of data showing softer consumer spending, sagging sentiment and subdued manufacturing suggest a U.S. economy with a more fragile foundation, prompting several forecasters to lower their estimates for growth.
Notably, inflation-adjusted personal spending declined in May for the first time this year, and gains in each of the prior four months were revised down, indicating that demand earlier in the year was weaker than previously thought. Home sales and manufacturing surveys are also showing signs of trouble.
The weakness in consumer spending, which is by far the biggest contributor to U.S. gross domestic product, compounded the souring outlook that already had some optimists turning cautious earlier in the week. Morgan Stanley economists now expect GDP to grow at a 0.3% annualized rate in the second quarter, down sharply from 2% just days ago.
