Consumer Spending Falls For First Time In Nearly Two Years, Incomes Barely Rise

WASHINGTON (Lucia Mutikani) - Consumer spending unexpectedly fell in June to post the first decline in nearly two years as incomes barely rose, a government report showed, suggesting economic growth could remain subdued in the third quarter.

The Commerce Department said on Tuesday consumer spending slipped 0.2 percent, the first drop since September 2009, after edging up 0.1 percent in May.

Economists polled by Reuters had expected spending, which accounts for about 70 percent of U.S. economic activity, to rise 0.2 percent.

When adjusted for inflation, spending was flat in June after easing 0.1 percent the prior month. The decline came even as gasoline prices retreated from their peak just above $4 a gallon in early May and suggested the much-anticipated bounce back growth in the third quarter would lack vigor.

Consumer spending barely grew in the second quarter, inching up at an annual rate of only 0.1 percent -- the weakest pace since the end of the 2007-09 recession. Spending increased at a 2.1 percent rate in the first quarter.

That contributed to hold the economy to an anemic growth pace of 1.3 percent in the second quarter.

The weak spending in June also reflected tepid income growth after employment growth ground to a near halt in June, with nonfarm payrolls rising only 18,000. Income ticked up 0.1 percent, the smallest increase since November, after rising 0.2 percent in May.

Disposable income ticked up 0.1 percent, also the smallest increase since November. But when adjusted for inflation, disposable income rose 0.3 percent. With real disposable income outpacing spending, savings rose to $620.6 billion from $581.7 billion in May.

(Editing by Andrea Ricci)

Copyright 2011 Thomson Reuters. Click for Restrictions.

US Shoppers Shy Away from Spending

Comments

[castlemike]

01:57 PM on 08/17/2011

This is old news Aug 2, 2011:

http://www.bloomberg.com/news/2011-08-02/consumer-spending-in-u-s-unexpectedly-falls-for-first-time-in-two-years.html

[OldTulsan]

03:03 PM on 08/17/2011

The oldest HuffPo comments are dated August 2, 2011.

[NWBrunette]

12:43 AM on 08/17/2011

Decimated economy, people out of work, low wage jobs with no benefits, sucking up taxpayer dollars to bail out billionaires, tax breaks to corporations to send jobs overseas. Thanks waackadoodles for ruining America.

[Box500]

08:13 PM on 08/16/2011

Hey Christmas is coming, when people all over the world, especially America, are guilted into spending money on worthless crap nobody needs.

[Arashi]

10:44 AM on 08/03/2011

Nah, can't be. Not after we paid the rich billions to trickle down on us, can't be.

[inthedesert]

10:33 AM on 08/03/2011

I am reading a book about the Great Depression and pretty much everything that led up to it is happening now or has already happened. Very scary times now.....won't get better either. Too much "hope" and not nearly enough actual "change". LOL. That "hope" turned out to be nothing more than HYPE from BO.

[AZreb]

10:23 AM on 08/03/2011

Simple equations:

No job = no paycheck
No paycheck = no money
No money = can't buy

Is that too hard to understand?

[seereene1]

01:59 PM on 08/03/2011

Don't know why this is such a disconnect for folks on the right. By cutting jobs - creating more unemployment - less spending power = less hiring - and a continued downward spiral of depression! AND those of us on fixed incomes - scared about losing benefits are hanging on to ever single nickle and tucking it under our mattress'.

[main945]

02:26 PM on 08/17/2011

the discommect for folds on the right boils down to what I always said about them
THE RICH AND THE DUMB WHO BELIEVE THEM

[judow]

12:51 AM on 08/03/2011

this is what happens when consumers in the consumer based economy run out of cash & credit

[urnumbersix]

09:16 PM on 08/02/2011

HERE is what this road looks like further down the path:

http://www.guardian.co.uk/world/2011/aug/02/greece-family-ties-debt-crisis

If you don't have relatives to take you in, or land in which to garden your own food, start looking - Hard - at appliance boxes to live in....

It you "think" you are OK - how "OK" are you going to be with your relatives IN your home?!?
(Unless you coldly turn them away....)

Face it.
"Average-People-Not-Spending-Money" (because they have none) is the end-all of Everything!

[BarelyLucid]

10:14 AM on 08/03/2011

Very good and descriptive article of our most likely near future. Thanks for posting it.

[William Brock]

07:29 PM on 08/02/2011

When 2 million Americans are filing unemployment each month, 400 thousand plus each week, month after month for over several years and no jobs have been created, you better be saving your money. A total collapse is just around the corner, you have seen nothing yet folks. Stop buying "stuff" and stick to just what you need to survive. You need to sock it away and not in a bank…The good old coffee can or mattress is your best bet. We are headed for real trouble! This is like nothing seen before. Prepare now. This is going to get ugly……..You Watch.......good luck!

[Vic22]

05:39 PM on 08/02/2011

It shows how little people understand how interconnected everything is. Companies try to increase their bottom line by outsourcing today, but in an economy that is 70% consumer spending, they are hurting themselves tomorrow by eliminating the consumer

[urnumbersix]

09:21 PM on 08/02/2011

They don't need us.

They've got "new" friends.
"New" consumers.
All over the world....

Until they drop "those" friends to exploit new low-cost labor markets.
(They are already fleeing China and India. "Too expensive" to biz There now.
Repeat and repeat. To infinity....

Let's get those new treaties signed for Free Trade to Vietnam, et al.

[Vic22]

06:07 PM on 08/03/2011

Yeah, eventually, if the republicans get their way, job's will come back because we'll be a low wage country, and we'll be manufacturing for all of the emerging markets

[cwaged1002]

07:52 AM on 08/03/2011

How stupid is it for any country to allow their economy to regress to 70% on consumption?

[fortressfountain]

05:22 PM on 08/02/2011

When I get the pre-approved credit card forms I send them to the company and tell them to take me off of their preditory lists. I even opted out and I still get the junk mail.

[MajorKong]

05:13 PM on 08/02/2011

Kind of hard to spend when your job's been offshored or your wages have been cut.

[fortressfountain]

05:01 PM on 08/02/2011

It is time to give the corporations a wake up call!
If we are not good enough to work for you-we are not good enough to buy from you!

[grrchrds]

04:49 PM on 08/02/2011

At this rate, Obama will lose by a landslide next year. Another negative achievement he can add to his growing list.

[cwaged1002]

07:53 AM on 08/03/2011

Better not bet the house on it. Look at the alternative.

[SiameseTrainer]

11:36 AM on 08/03/2011

The alternative, lets see...you mean repoblicans who are upfront about being repoblicans?

[seereene1]

02:02 PM on 08/03/2011

There isn't a drug I could take that would compel me to vote for ANY Republican after seeing how far they will go to defeat O and ruin this country.

[notdarkyet]

03:58 PM on 08/02/2011

The SM is down over two percent before the final bell. I wonder if it is consumer spending, Italy and Spain stocks taking a beating, or maybe a bunch of them bet we would default?