U.S. consumer spending falls for first time in six months
Consumer spending fell in July for the first time in six months, as Americans cut back on purchases of new cars and other retail goods, the government reported Friday. The drop in spending was a bit of a surprise: economists polled by MarketWatch had predicted a seasonally adjusted 0.1% increase. The reduction in spending last month suggests the economy won't match the second-quarter growth rate of 4.2% unless outlays rise much faster in August and September. July is the first month of the third quarter. The growth in incomes, meanwhile, slowed to 0.2% pace in July from 0.5% in each of the prior two months. It was the smallest gain since December and also below Wall Street expectations. Consumers socked more money away instead of spending it. The savings rate climbed to 5.7% from 5.4% and reached the highest level since the end of 2012. Also, inflation as gauged by the PCE price index rose a scant 0.1%, and the increase over the past 12 months was unchanged at 1.6%. Inflation spiked earlier in the year but has leveled off during the summer. The core PCE rate that excludes food and energy also edged up 0.1%.
-Jeffry Bartash; 415-439-6400; AskNewswires@dowjones.com
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