Spending by U.S. consumers is growing at a slower pace and the share of households making major purchases in recent months declined, according to a report from the Federal Reserve Bank of New York.
Monthly household spending grew by 7.7% in December from a year earlier, down from a high of 9% reached in August, according to survey results released by the New York Fed on Tuesday. That growth is still above the 5.1% growth seen in December 2021 and remains “well above” the pre-pandemic level of 2.5%, according to the report.
Fed officials are attempting to cool spending — and in turn tame price growth — by rapidly raising borrowing costs. The U.S. central bank lifted its benchmark rate by 50 basis points to a range of 4.25% to 4.5% in December, up from near zero levels last March. Median projections show policymakers see rates rising to above 5% this year, and officials are largely expected to raise rates by a quarter point when they meet next on Jan. 31 to Feb. 1.
