U.S. Economy Continues to Grow, however More Slowly

Many companies appear to suppose so. Companies didn’t add to inventories within the first quarter, a sign that they anticipate gross sales to gradual within the months forward and don’t need to be caught with merchandise they will’t promote.

“Consumption is still strong, and yet businesses seem to think that they don’t need to restock inventories because presumably they think consumption will weaken,” mentioned Megan Greene, chief economist for the Kroll Institute. “So who’s right?”

At Nexgrill, a California-based vendor of grills and different outside cooking tools, gross sales of lower-end fashions, these beneath $500, have been sturdy to this point this yr, mentioned Ramsay Hawfield, a vice chairman on the firm. But gross sales of higher-priced merchandise have begun to gradual in latest months, which Mr. Hawfield takes to imply that some customers are watching their budgets extra intently.

“They’re not feeling as rich as they were a year or two ago, and now they’re feeling a little pinched and a little nervous,” he mentioned. “The person that was buying that $500 or $600 grill is saying, ‘Maybe I’ll go with that $300 or $400 version.’”

Nexgrill isn’t shedding any employees, Mr. Hawfield mentioned, and it’s nonetheless investing in new merchandise. But it’s doing so rigorously, avoiding options that buyers won’t deem price the additional price. Retailers, he added, are pushing Nexgrill and different manufacturers to maintain costs down — one thing that was a lot much less true a yr in the past, when customers hardly appeared to take a look at value tags.

“They’re pushing us on ‘Let’s find a better price point,’” he mentioned.

A gradual pullback by customers can be welcomed by policymakers, who fear that continued free spending is fueling inflation. Consumer costs rose at a 4.2 % annual charge within the first quarter, in response to the information launched Thursday, sooner than on the finish of final yr and nicely above the Fed’s goal of two %. Fed officers will collect subsequent week in Washington and are anticipated to boost charges for the tenth assembly in a row.

Policymakers will get a extra up-to-date studying on the economic system on Friday, when the Commerce Department will launch revenue and spending knowledge for March and the Labor Department will launch knowledge exhibiting whether or not wage progress continued to gradual within the first quarter, a key intention for the Fed.