Sorry, I’ve been on the road, so not much time for writing. I did want to quickly mention a couple of points about the data on consumption for May which were released on Friday.

First, real consumption actually fell in the month. That is not good news, but as the law of economic data says, do not pay much attention to a single month’s data.

Income also fell, but making a big deal of this is in the ungodly stupid category. Income for March and April was inflated by Social Security checks sent to recipients as retroactive payments for 2024 provided by the Social Security Fairness Act. Those checks stopped coming in May, hence the fall in income.

But stepping beyond the one-month issue, if we compare May consumption to October, the last month before people knew Trump would be in the White House, the picture is not very good. The logic of going this far back is that durable goods consumption jumped, beginning in November, as people wanted to beat price increases from the Trump tariffs.

Anyhow, overall consumption has grown at 1.4 percent annual rate since October. That is not a great story for the economy. If consumption is growing at a 1.4 percent rate, it is hard to see the economy growing much faster.

Remember, consumption is 70 percent of GDP. Government spending is more than half of the remainder, mostly state and local. With Trump and the Republicans trying to shut down much of the government, does anyone anticipate rapid growth there?

Housing accounts for 4 percent of the total. With mortgage rates staying high and people uncertain about the future with Trump’s constantly changing policies, don’t anticipate any big upswings here.

Investment is also hit with uncertainty. The Biden boom in factory construction is unwinding. Investment in intellectual products is likely going nowhere, with Trump nixing all sorts of funding and projects. Equipment investment is also likely to be hit by uncertainty.

We will see an improvement in the trade balance in the second quarter, but that’s after a surge in the first quarter. Hard to make any bets with Trump’s erratic policies and chasing away foreign visitors.

Long and short, May is just one month, but the picture was not very good.

This first appeared on Dean Baker’s Beat the Press blog.

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