US consumer spending flat despite income gains

US consumers spent a little bit less in June than in May as incomes rose 0.5 percent, official data showed Tuesday, highlighting tepid consumption leading the economy's slowdown.

The Commerce Department reported spending was essentially flat last month, falling by $1.3 billion, or less than 0.1 percent.

Spending fell 0.1 percent the previous month, according to the department's annual revisions.

Personal income surged 0.5 percent higher in June, the second straight month of growth. Disposable personal income rose 0.4 percent.

"With consumer spending still representing a share close to 70 percent of GDP, today's report does not look positive for Q3 growth," Nomura analysts said.

Americans have been cautious about spending amid high unemployment and a depressed housing market as concerns mount about the US economy's health in the face of the eurozone debt crisis, slowing growth in China and looming US tax hikes and spending cuts at year-end.

A fall in consumer spending was the main brake on growth in the second quarter. Last Friday the government reported gross domestic product growth slowed to 1.5 percent in the April-June period from 2.0 percent in the first quarter.

Prices remained tame. The personal consumption expenditure price index, a strong indicator of the inflationary trend, edged up 0.1 percent in June after a 0.2 percent decline in May.

Excluding food and energy prices, the PCE price index rose 0.2 percent, after inching up 0.1 percent the prior month.

On a 12-month basis, price increases were the same for a second consecutive month: PCE rose 1.5 percent and core PCE was up 1.8 percent.

Source: http://news.yahoo.com/us-consumer-spending-flat-despite-income-gains-145049146.html

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