Spending Slowdown May Spare Rate Hike

U.S. consumers are taking a breather after spending their tax refunds and loading up on debt in the first three months of the year, slowing the economy to a pace that may keep the Federal Reserve from boosting interest rates.

The government’s report on retail sales set for Thursday should confirm a slowdown in consumption. A rapid payout of tax refunds helped propel the economy forward at the fastest pace in a decade during the first quarter. As consumers spent those refunds, they also borrowed money and now they’re struggling to pay the bills.

Industry reports already show U.S. auto sales fell by a larger-than-expected 5.8 percent in May.