washington june 30 reuters  us consumer spending slowed sharply in may but persistently strong underlying inflation pressures could compel the federal reserve to resume raising interest rates next month consumer spending edged up 01 last month the commerce department said on friday data for april was revised lower to show spending accelerating 06 instead of 08 as previously reported economists polled by reuters had forecast consumer spending which accounts for more than twothirds of us economic activity rising 02 last months small gain implies consumer spending moderated in the second quarter after rising at its fastest pace in nearly two years in the januarymarch period nevertheless the pace is probably still sufficient to help keep the economy expanding strong consumer spending accounted for the economys 20 annualized growth pace last quarter defying fears of a recession because of the feds hefty rate hikes upbeat may data including job growth housing starts and orders for longlasting manufactured goods have led economists to expect that secondquarter gross domestic product growth would be close to the firstquarter pace the atlanta fed is currently estimating gdp increasing at a 18 rate this quarter consumer spending remains underpinned by strong wage gains in a tight labor market but the outlook is less favorable most lowerincome households are believed to have depleted savings accumulated during the covid19 pandemic about 266 million americans with federal student loans will start making interest payments in october when a more than threeyear moratorium ends morgan stanley estimates that the hit to income at the disposal of households could lower inflationadjusted consumer spending by about 10 basis points this year and slice off seven basis points from gdp growth the personal consumption expenditures pce price index gained 01 in may after rising 04 in april in the 12 months through may the pce price index advanced 38 after climbing 43 in april excluding the volatile food and energy components the pce price index gained 03 after rising 04 in the prior month the socalled core pce price index increased 46 on a yearonyear basis in may after advancing 47 in april the fed tracks the pce price indexes for its 2 inflation target