Consumer spending recedes; GE Appliances to move washer production to US; Jobless claims decline

May’s U.S. personal spending declined a slight 0.1% from the prior month as household income slid 0.4%, though the latest Commerce Department numbers showed consumer inflation continuing to edge lower on an annual basis.

The department’s overall inflation reading, preferred by the Federal Reserve in gauging economic momentum, showed costs rising at an annual rate of 2.3% in May. That was lower than the Labor Department’s 2.4% in its better-known consumer price index, and also closer to the Federal Reserve’s 2% target for considering future interest rate cuts.

Commerce data showed housing costs remained a leading driver among categories showing spending boosts for the month, posting a 13.7% rise from April. In contrast, spending on motor vehicles dropped 49.3%, gasoline declined 19.8%, and food services and accommodations slid 10.6%.

Michael Pearce, deputy chief U.S. economist at forecasting firm Oxford Economics, said nearly all of May’s overall spending decline could be attributed to a drop-back in auto sales. It followed consumers’ April “front-running” of vehicle purchases ahead of tariffs taking effect on imported cars and auto parts.

“Much of the decline in personal income and spending in May was due to an unwinding of temporary factors, but the trend in parts of discretionary spending has weakened, and we expect a further slowdown in the coming months as tariffs begin to weigh on real disposable incomes,” Pearce said in a statement.

GE Appliances plans to move a large part of its washing machine production from China to Kentucky, as companies across multiple industries seek to minimize effects of trade tariffs on imported goods through enhanced U.S. onshoring.

The company is targeting a $490 million investment as it expands washer production in Louisville, its global headquarters, with plans to create at least 800 jobs. GE Appliances will expand production of more than 15 washer models, taking the total area of its clothes-care appliance production to the equivalent of 33 football fields at its headquarters complex.

“We are bringing laundry production to our global headquarters in Louisville because manufacturing in the U.S. is fundamental to our ‘zero-distance’ business strategy to make appliances as close as possible to our customers and consumers,” GE Appliances CEO Kevin Nolan said in a statement.

“This decision is our most recent product reshoring and aligns with the current economic and policy environment,” Nolan said. The announcement came as companies in several industries, such as automaking and computer chip production, have been increasing investments in U.S. manufacturing plants.

GE Appliances is a subsidiary of Chinese manufacturer Haier, which acquired the appliance division of General Electric in 2016 and has rights to use the GE brand name through 2056. 

Initial U.S. claims for unemployment insurance totaled 236,000 for the week ended June 21, down 10,000 from the prior week’s revised Labor Department figures, though some analysts said a rise in continued claims could signal softening in the labor market and factor into Federal Reserve interest rate decisions.

The latest available government data showed continued claims in all unemployment programs at about 1.8 million for the week ended June 7. That was down about 12,700 from the prior week but higher than the 1.7 million figure for the comparable week of 2024.

“Initial claims for unemployment insurance benefits remain low, but the rise in continuing claims is concerning as it’s a sign that there are some fissures in the labor market,” Ryan Sweet, chief U.S. economist at forecasting firm Oxford Economics, said in a statement. “If the Fed pivots and signals that it will cut rates earlier than we anticipate, with the next occurring in December, it will be because of the labor market.”

The Fed left rates unchanged at its June meeting and its next rate-setting meeting is scheduled for July 29-30. Oxford lead economist Nancy Vanden Houten said recent layoff notices in several industries “suggest we could see a pickup in job losses and initial claims in the weeks ahead.”