Americans’ Spending Barely Grew in June as Incomes Stagnated
Consumer spending lost momentum in June and a drop in dividend payments caused incomes to stagnate, signaling the U.S. economy may get less help from households this quarter, Commerce Department figures showed Aug. 1.
Highlights of June Personal Income and Spending
• Purchases rose 0.1% (estimated 0.1%) after 0.2% gain in May.
• Incomes were little changed (estimated 0.4%) after 0.3% advance.
• Price gauge tied to consumption was unchanged for a second month (estimate unchanged); was up 1.4% from year ago (est. 1.3%).
• Excluding food and energy, prices rose 0.1% for second month (est. 0.1% rise); core up 1.5% from year ago (est. 1.4%).
Key Takeaways
June marked a third straight month of slowing nominal spending. A weaker handoff into this quarter signals household outlays, which accounts for about 70% of the economy, could come short of matching the pace of the prior three-month period that helped lead a rebound in economic growth.
Incomes were little changed in June, due to a 3% drop in dividend payments following a 4.8% surge a month earlier that reflected a special payment from Costco Wholesale Corp. Wage growth, however, picked up. Sustained pay gains, along with steady hiring, healthier finances and low inflation, could encourage Americans to accelerate their spending.
The data on prices showed inflation, while exceeding forecasts, will take time to reach the Federal Reserve’s 2% goal. The Fed’s preferred inflation gauge, which rose in June from a year earlier, has exceeded policy makers’ target in just one month since April 2012.
Other Details
• Saving rate fell to 3.8% from 3.9% in May.
• Wages and salaries rose 0.4% following a 0.1% gain.
• Adjusted for inflation, purchases were unchanged after rising 0.2%.
• Spending on durable goods fell 0.1% after adjusting for inflation, while outlays for services rose 0.1%.
• Disposable income fell 0.1% after adjusting for inflation, the first drop this year.
With assistance by Kristy Scheuble
