Consumer spending edges higher; Costco tweaks supply chains; Father’s Day splurging may hit record

April’s overall consumer spending increased by a slight 0.2% — or $47.8 billion — from the prior month, according to the latest Commerce Department figures. Personal income rose 0.8% for the month.

Spending growth was down from the March growth rate of 0.7% after several months of slowing amid dropping consumer confidence spurred by shifting tariff and other federal policies. The government said housing and utilities led tracked categories with $24.7 billion in added spending for April, followed by healthcare at $20.3 billion.

Housing has long been a major contributor to U.S. inflation, though the Commerce Department’s latest measure showed overall prices rising at an annual rate of 2.1% in April, lower than the 2.3% April rate reported earlier for the Labor Department’s better-known consumer price index. The Commerce Department metric is preferred by the Federal Reserve and also posted closer to the Fed’s 2% inflation target as it considers interest rate reductions, with its next meeting slated for June 17-18.

The latest revised figures in the University of Michigan’s closely watched national consumer survey showed sentiment posting at 52.2 for May, unchanged from April but well below the 69.1 for May 2024. Numbers generally reflect the percentage of respondents with favorable views of their household finances and the larger economy.

“Overall, consumers see the outlook for the economy as no worse than last month, but they remained quite worried about the future,” Joanne Hsu, the university’s consumer survey director, said in a May 30 statement. “Year-ahead inflation expectations were little changed at 6.6%, inching up from 6.5% last month.”

Costco Wholesale is changing the country sourcing of some of its products along with other supply chain adjustments in response to trade tariff hikes, as the nation’s third-largest retailer joins numerous companies seeking to put some certainty into business planning.

“In the U.S., we are sourcing more American-made goods where available, including items such as mattresses, pillows and plastic resin goods,” Costco CEO Ron Bakris told analysts during the Issaquah, Washington-based company’s latest quarterly earnings call on May 29.

Bakris said the operator of more than 900 warehouse club stores worldwide has also rerouted some supply chains and speeded up some shipments to get ahead of tariffs, as it seeks to reduce internal costs and minimize price increases. Several other companies have announced they are implementing or planning price hikes, including Walmart, Ford, Subaru, Mattel and cosmetics maker E.l.f.

Executives at Best Buy, which gets about 30% of its merchandise from China, told analysts the operator of more than 1,100 stores will likely need to raise prices. Minneapolis-based Best Buy cited slowing sales and profit growth in its latest quarter, amid higher costs tied to tariffs, as it reduced its guidance for fiscal 2026. It joined other retailers making similar tariff-related guidance cuts, such as Macy’s and Abercrombie & Fitch.

Cost-conscious consumers apparently aren’t planning to skimp when it comes to Father’s Day. The June 15 holiday is expected to generate a record $24 billion in spending this year, according to the National Retail Federation and consulting firm Prosper Insights & Analytics.

Based on nationwide consumer surveys, that figure is up from last year’s $22.4 billion tally and exceeds the previous Father’s Day spending record of $22.9 billion, the retail trade group reported. Nearly half, 48%, of this year’s 8,225 survey respondents plan to purchase a gift for a father or stepfather, with 25% to buy gifts for a husband.

About three-quarters overall will celebrate Father’s Day in some way this year, with planned per-person spending averaging $199.38, nearly $10 higher than last year. The largest contingent, 41%, listed online sites as their top place for spending, followed by department stores at 35%.

Many will spend across multiple categories. Similar to prior annual surveys, 58% of respondents plan to purchase a greeting card, with 55% buying clothing, 53% planning a special dinner or outing and 50% looking to buy retail gift cards.